Deutsche Bank Share Price: The Spectacular Comeback Explained

Summary:
• What is the outlook of the Deutsche Bank share price? We explain why the DB stock is set to do well in the near term.

Deutsche Bank (NYSE: DB) share price has made a spectacular recovery in the past few months, helped by the soaring interest rates and the company’s turnaround strategy. The stock has bounced back by 86% from its lowest point in 2022, making it one of the top DAX index performers. Further, Deutsche has outperformed the SPDR Bank ETF.

Deutsche Bank had a strong quarter, helped by the soaring interest rates and a sharp decline of deliquencies in Germany. Its profit before taxes came in at €5.6 billion while its net profit was about €5.7 billion. The company has also lowered its cost structure, with the cost-to-income ratio being at 75%. Deutsche Bank has also reduced its leverage by 43%.

Deutsche Bank stock price forecast

Let us go back to a few months ago, when the DB stock price formed a double-bottom pattern at $7.53. This pattern is usually a great reversal pattern. The shares moved above the neckline of this pattern at $9.52, which was also the 23.6% Fibonacci Retracement level.

Now, the Deutsche stock has risen above the 61.8% Fibonacci level. Notably, the shares have formed a golden cross pattern on December 20th. In price action, this pattern is usually a bullish sign. At the same time, the Money Flow Index (MFI) has moved slightly below the overbought level.

Therefore, with the European Central Bank (ECB) set to deliver more rate hikes, there is a likelihood that the shares will continue soaring as buyers target at $16.75, the highest point on February 2022. A stop-loss of this trend will be at $12.

DB stock 4H chart analysis

On the four-hour chart, we see that the DB stock price has been in a strong rally in the past few months. The shares have risen to the important resistance level at $11.27, the highest point since May 31st. It also invalidated the bearish view of the rising broadening wedge pattern that happened between November 14 and December 20.

The shares have moved above the Ichimoku cloud indicator and all moving averages. Therefore, using the principles of trend following, we can expect that the stock will continue rising in the coming months. If this happens,the next psychological level to watch will be at $20. The stop-loss of this trade is at $12.