Interactive Investor

Danger signs for Lloyds Bank shares

Retail bank shares have had a great run in recent months, but independent analyst Alistair Strang has become worried about share price behaviour at Lloyds. 

3rd June 2024 07:39

by Alistair Strang from Trends and Targets

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Something quite interesting appears to be going on at Lloyds Banking Group (LSE:LLOY), perhaps finally justifying our three weekly review of the ongoing mess. 

Last time we reviewed Lloyds, we’d given 55.8p as a fairly major target and it’s been an ambition easily achieved. Now, there’s a visual risk of things going a little wrong as the share price has suffered a GaGa - a Gap Up followed by a Gap Down.

This particular market dance step, almost unique to the UK market, calculates with an interesting possibility, one which suggests an attempt may be underway to “slow” down the pace of Lloyds' movements for reasons we don’t get.

But the immediate situation is one of mild catastrophe, with movement below 54.4p potentially triggering reversals to 53p with our secondary, if broken, at 51.4p. Unfortunately, thanks to the width of the gapping movements, these numbers, especially the secondary, enjoy a 0.7p error potential.

Over the years, we’ve had plenty of time to map these GaGa events and they’re usually quite reliable. In this instance, should it trigger, we’d actually hope for a bounce above our 51.4p secondary as the market appears to be anointing that blue line with a degree of importance. And of course, should the market opt to Gap Lloyds upward at the open anytime soon, all bets are off as guesswork will be needed to map any fall.

In the less likely event the market continues some sort of upward push against Lloyds, above just 56p should now make an effort to attain 57p next and visually, some possible hesitation. Our secondary, if bettered, calculates at a suspiciously precise 58p but, in the event the share price closes above 57p, it enters the realms of a longer-term cycle to an impressive 68p.

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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. 

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