Interactive Investor

Future looks bright for Lloyds Bank shares

A recent break above 50p for the first time in 11 months has generated plenty of optimism about Lloyds and other high street banks. Independent analyst Alistair Strang reveals what his software says could happen next.

4th April 2024 07:39

by Alistair Strang from Trends and Targets

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Lloyds Banking Group (LSE:LLOY) is starting to show some signs of becoming interesting (along with other members of the financial sector), with a result we’re taking a “better late than never” stance, if only due to our target numbers changing.

There’s certainly some excitement, perhaps a bit muted, about Lloyds finally breaking the 50p level, even though the movement was carried out by a little bit of manipulation, the share price being gapped up from 50p to 51.1p as March drew toward a close.

While some sectors of the financial press are positively drooling at this movement, one even inventing 70p as the next major target, our inclination is to rely on our software, as historically it has proven pretty reliable in mapping the retail banks.

Now above just 52.5p currently looks capable of triggering fairly near-term gains to an initial 55.5p and perhaps some hesitation given the share prices behaviour at such a level since 2022. Our longer-term secondary, if 55.5p is exceeded, works out at 60.5p where our logic demands witnessing the share price closing at such a level before being confident of a reasonable future. The 60.5p level is a big deal, marginally exceeding the high pre-pandemic, and only once the price actually closes above such a point does it become very probable happier days are ahead.

One mildly important facet of Lloyds' current movements is represented by the Blue line on the chart below. This Blue crayon mark shows a downtrend which dates back to the financial crisis of 2009 and, for some reason, the market appears to be currently treating it as important given price movements during the most recent seven sessions. We can argue closure around the 60.5p level shall be significant, suggesting the price has broken free from the gloom of the big market crash and the doom of the Covid-19 era.

This being the case, we can easily shift into “big picture” mode and suggest ignoring any pundits promoting the idea of a 70p target level. Instead, we are able to calculate 89.6p as a viable future ambition.

Of course, this is a retail bank, always at the mercy of politicians, economists, and others. As a result, below 50p shall now be viewed as dangerous, giving the potential of reversal to an initial 47.3p with our secondary, if broken, at 46p and a hopeful bounce.  

One other thing worth remembering, if you wake up during the next few weeks and the market as chosen to gap Lloyds down at the open for any reason, there is a reasonable excuse for some panic. But for now, we’re quite hopeful.


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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