Lloyds Bank shares: The critical support level

by Alistair Strang from Trends and Targets |

With bank shares still dancing to the Brexit beat, our chartist explains why he fears the worst.

Lloyds Bank (LSE:LLOY) 

Our monthly visit to a favourite Banking Sector candidate, Lloyds Banking Group (LSE:LLOY), once again permitted congratulations for the prior report.

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

Alas, the next few sessions are liable to prove "interesting", thanks to the potentials if the price manages to stumble below 56p. We moaned, previously, of banking shares dancing to Brexit tunes and this remains the case.
 
In fact, if we review the overall banking sector, FTSE:NMX8250, at time of writing it's trading at 3,781 and is flirting with some fairly nasty dangers.

It only requires weakness below 3,730 to trigger some misery down to an initial 3,600 with secondary, when broken, at a bottom (hopefully) of 3,212 points. Crucially, similar to Lloyds, it has not yet broken its final immolation trigger, so hope remains.
 
In the case of Lloyds, below 56p now calculates with travel down to 51.8p next. This ambition coincides with a long-term uptrend which implies a bounce can be expected, should such a level make an appearance.

Our secondary, if 51.8p breaks, is down at 46.8p, a point where there's almost a requirement for a rebound.

The "however" is quite dangerous, thanks to 46.8p taking the share into a region where the big picture computes with 41p as a pretty major expectation, along with an eventual journey down to 26p.

Our suspicion is we shall witness 51.8p eventually and this should coincide with the overall sector at the 3,600 level. And hopefully, everything should rebound.
 
At present, we require Lloyds to exceed 62.25p as this should calculate with a genuine bounce, propelling the share into a region where an initial 67p is supposed to be real.

According to the tea leaves, our secondary of 71.25p risks being game changing for the longer-term, allowing some fairly impressive (and unheard of for nearly 10 years) longer term target levels.
 
For now, while we can hope 51.8p shall be "it", historical behaviour in the banking sector makes us fear the worst.

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, Shareprice, 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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