Interactive Investor

A change of trend for Legal & General shares

L&G shares has enjoyed a 10% recovery over the past month, up from multi-year lows. Independent analyst Alistair Strang gives his assessment of what's happened and where the price could be heading.

21st November 2023 08:26

Alistair Strang from Trends and Targets

We reviewed Legal & General Group (LSE:LGEN) in July, confidently predicting the potential of reversal to 193p and below. An email politely enquired if we’d like to change our stance on the share, given it “only” fell to 203p and appears to be bouncing? This thankfully gives us an excuse to present recent movements as a ‘learning opportunity’, rather than admit we got it wrong!

The ‘Learning Opportunity’ comes from what occurred once the share price bounced, as two separate and hopefully significant things took place.

Firstly, the price of L&G closed above the level of the trend break on 13 November, ending the day at 225p. This ticks a pretty important box as generally we take this as a signal everything has changed.

Secondly, and perhaps more importantly, the share price has chosen to regain the prior Red uptrend, quite literally manipulated (gapped) above the trend on 15 November, and this provides what is usually a strong indication the market has had a change of heart for the future. Despite the share price squirming around, our inclination is to take hope for the immediate future.

Currently, above 232p should prove capable of triggering a nod in the direction of 240p, with our longer-term secondary, if bettered, at a future 270p. This secondary is doubtless going to prove important, if achieved, as it has the capability of declaring a new high for the share price in 2023, especially as it dumps the price into a zone where a distant cycle to 308p can be expected.

As usual, we can provide a slightly vague converse scenario, as perhaps the market shall indulge its sense of humour, one which suggests weakness next below 224p risks promoting the idea of reversal down to 205p. If broken, our secondary calculates at 191p and hopefully a bounce.

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.