Lloyds Bank shares: Are they really on track to hit 85p?

Our analyst discusses the potential of Lloyds shares to hit levels not seen since 2015, or not.

As we enjoy the agony of our last monthly review of Lloyds Banking Group (LSE:LLOY) for this decade, we can reflect, quite happily, on the successful movement to our “breakout” target level at 68p.

• Are Lloyd's Bank shares about to break 10-year downtrend?

Curiously, the share price has not yet actually closed above this level, so the Lloyds party popper remains unpulled!

By any normal standards, we’ve be cheerfully now proposing 85p as the next major target level but there are a couple of issues to remember.

Firstly, this is a retail bank with share price movements often holding a closer correlation to the weather report, rather than any hard and fast logic. 

Secondly, the price has not closed above our 68p level, something we regard as critical to confirm a change of trend. 

And third, the share price, similar to Barclays, was gapped up above the trend. Our fear of a GaGa scenario remains solid with the implication of Lloyds being “gapped” below the trend creating a scenario of reversal to 33p!

When we review price movements in the period since the decisive Conservative election victory, the real hope of clarity in the country’s political future suggests anything near term above 70p should increase Lloyds price to an initial 74p with secondary, if bettered, up at 77p.

Better still, should the share manage to actually close a session above 68p, our longer term ambition at 85p becomes a reality.

Unfortunately, this is the end of the good news. Weakness now below 62p risks reversal down to an initial 58p. If broken, secondary is at 51p. We shall not find this sort of thing too alarming, simply trading the price below the downtrend since 2009 (again), essentially parking it until a suitable excuse is discovered for some proper upward travel. 

As mentioned previously, we shall be extremely alarmed if the market now finds an excuse to gap the price back below the trend. This sends one of the worst signals possible.

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.