This morning I was looking for a nice short position to take since the index futures were all down and noticed that Ireland’s debt levels were downgraded by the S&P. An Irish bank called Allied Irish Banks (AIB) lost 9% over the weekend on the news. After looking into it a little further I noticed that the stochastic levels on the daily chart and the RSI levels both indicated AIB being strongly overbought. The MACD line has yet to cross but looking at the historical data over the past few months the MACD has lagged on such moves.
I took a short position in the morning of $5.69 with a $6.02 stop just in case. Looking at the fibonacci retracement levels AIB should go down to $4.75 for a 32% retracement and $4.23 for 50%. Adding to the fact that the S&P has said it might downgrade Ireland’s debt rating further and that the price is set to dip under the $5.0 range which is a selling point for many mutual funds this looks like a nice position.
I’ll keep you posted on the developments.