Lloyds Bank shares: A second opinion
21st November 2018 09:00
by Alistair Strang from Trends and Targets
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There's plenty of negativity around UK bank shares, and macroeconomics and geopolitics have played havoc with the sector, so chartist Alistair Strang gives his view on this popular stock.
Lloyds Bank (LSE:LLOY)
As always, we've been delaying our 'monthly' visit to Lloyds Banking Group in the hope it does something interesting. To be fair, if you regard watching a duck crossing the M25 as 'interesting', the share price is certainly worth watching.
When we last reviewed the price, we mentioned the possibility of a fake, short-lived bounce at the 55p level. In the last few days, this event finally took place and, while the rebound to 56.09p was encouraging, we dare not ignore the fact the price actually did break the 55p target, almost hitting 54p during intraday trading.
Similar to the duck on the M25, we don't expect any bounce to have a chance as too many arguments now favour 52p, with some rebound potentials. But, of course, the big picture wants the price to bottom before 50p.
Our inclination is to regard both numbers as essentially the same, now taking the stance of expecting a bounce somewhere between 50p and 52p. Visually it even makes sense.
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To get out of trouble, the share price requires to close a session above red, 61p at present.
What happens if 50p breaks?
The longer-term implications are truly unpleasant. Initially we suspect continued reversal down to 41p. If broken, secondary is at 31p. Neither calculation gives any real hope as being "bottom", but there is a strange phenomena occurring with reversals possible in 10 increments, all the way down to 21p. Due to 21p essentially matching the low of 2011, this alone would doubtless cause a bounce, despite the big picture calculation giving 5p as bottom.
For now, the best we are hoping is a rebound at 52p, ideally without any intraday traffic breaking below 50p. That would be 'a bad thing'.
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.
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