Interactive Investor

How far can Lloyds Bank shares rally go?

17th January 2022 07:38

Alistair Strang from Trends and Targets

A share price rally is a month old now, but long-suffering investors may have further reason for optimism, believes independent analyst Alistair Strang

UK bank Lloyds Banking Group (LSE:LLOY) appears to be enjoying its own little party, finally.

Such has been the depressing regularity of suggesting a target level of 55p for Lloyds, we didn’t even bother mentioning the target level in our most recent update three weeks ago.

Instead, we simply said “Lloyds needs to trade above 48p to aim for any sort of safety”, assuming regular readers didn’t want us to again repeat our target levels. Finally, on 4 January, some magic happened and the share price was gapped up at the open above the 48p trigger, hopefully entering a brave new world for some movement of strength this year.

The share price has already achieved our 55p level and we’re especially interested in the effects of the two Red circled areas on the chart below. The price was gapped down at the tail of last year, gapped up at the start of this year, in a classic GaGa move, one which is now supposed to promote the idea of a visit to 58.5p being possible.

Such a target level should prove especially interesting, visually matching the price level enclosed with the Blue Circle at the start of 2020. We suspect this level shall prove some hesitation, and only with closure above 58.5p shall we dare exhibit hope for some solid long-term movements with the potential of considerable strength.

Source: Trends and Targets. Past performance is not a guide to future performance

Visually there’s every expectation of a glass ceiling at the 58.5p level, but the lesson from other world markets has been for hesitation to be brief, then share prices continue to move.

For things to go horribly wrong for Lloyds, the price needs flop below 44.7p, the level of the previous low, to utterly quash hopes for the future.

Obviously, as we’re discussing a UK retail bank, we’re slightly cautious with our optimism, but with share price movements such as experienced during the last 10 days, it’s difficult not to express hope.

Closure above 58.5p should now make a visit to an initial 63.5p possible, with our longer-term secondary calculating at an impressive 77p sometime in the future.

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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