Interactive Investor

Here's where Lloyds Bank shares must bounce

24th May 2018 09:34

Alistair Strang from Trends and Targets

Lloyds Bank (LSE:LLOY)

As always, it's difficult to contain our excitement when writing about a UK Retail Bank. The absolute thrill generated, running analysis on a share with a trading range of just 4p during the last few months, can only compare with watching a tree grow.

Actually, this is probably a reasonable comparison. We were going to use "watching paint dry", "a kettle boiling", or "grass growing" but quickly realised every simile actually moves faster than Lloyds Banking Group. On the other hand, trees don't do fast unless they are falling and again, this tends to suit Lloyds Bank.

Okay, time to stop waffling. It looks like Lloyds intends to hit 60p on the current cycle. If broken, our secondary is at 57p. Additional concern is generated by the two circled areas on the chart. During last year this gap up / gap down nonsense was an extremely reliable precursor for solid reversals. While this year the strategy has proven less common, it provides real concern as the arithmetic introduced advises Lloyds intends a bottom at 50.75p.

Our inclination is not to ignore this signal and instead suggest should Lloyds share price to reach 50.75p, a serious bounce can be hoped for.

To get out of this shambles, Lloyds need only exceed blue on the chart, currently at 70.08p. Bettering this trend is liable to be useful, calculating with 72.375p as an initial target. If bettered, our secondary ambition comes along at 75.5p and visually this is liable to be game changing, moving the share price into "higher high" territory and forcing us to stir the tea leaves again.

For now though, we suspect a slowdown to 60p is on the cards. Whether any bounce proves sufficient to cure our miserable streak remains to be seen.

Source: interactive investor             Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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