Interactive Investor

BT: a share price at a crossroads

Optimism is warranted, but the situation still looks volatile.

21st April 2021 08:35

Alistair Strang from Trends and Targets

Optimism is warranted, but the situation still looks volatile.

BT Group Plc

We last reviewed BT Group (LSE:BT.A) two years ago, on 9 April 2019. It was trading at around 223p, and our report gave criteria for reversal to 99p.

Despite checking BT daily for clients, we'd completely forgotten our previous report, and discovered the share price indeed hit our target last year. However, it bounced in the most lacklustre fashion in the period since.

Our inclination is now toward some optimism for the future, thanks to the share price now breaking through the five-year downtrend and attempting to paint a series of higher highs.

The immediate situation with BT is fairly straightforward, the share price (presently trading around 153p) needs to exceed 158p, as this should trigger some price growth to an initial 176p.

If exceeded, our longer-term secondary is a bit confusing. It's either 182p or 200p, depending on which series of calculations we believe.

Essentially, should 176p be exceeded in the course of normal trading, ongoing traffic to 182p makes sense. However, should 176p be exceeded thanks to some positive news, then the share price could sharply accelerate to 200p.

It's pretty unusual to face this type of numeric calamity, and it's thanks to the share price opting to remain fascinated with the 99p level for six months last year.

Visually, there's a pretty strong argument favouring some hesitation, if the 200p level ever makes an appearance and we'd certainly prefer running the numbers again at such a point.

Finally, if BT decides to dial the wrong number, below 99p risks trauma with a probable visit to 86p, a short-lived bounce, then a visit to 42p as the ultimate bottom we can calculate. Needless to say, we've already forgotten that secondary ambition!

Source: Trends and Targets. 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 or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.