Is there light at the end of the tunnel for Centrica shares?

Things have got messy for the utilities firm, yet our chartist sees a slight glimmer of hope at this price.

Centrica (LSE:CNA) 

When we last covered this potential disaster (and dodgy chart pattern) in May, nerves were expressed regarding the share price future. A hopeful bottom of 82p had been designated as important, essentially as further drop potentials were really quite messy. In fact, 28p and less was mentioned as further drop targets!

• How Centrica shares could be worth 120p again
• Centrica: When will these bashed-up shares be a 'buy'?

Without a doubt, things have now gotten messy with the loss of their chief executive, a large pre-tax loss, and reportedly large numbers of customers unplugging from the company.

Thankfully, their CEO was awarded a 44% pay rise in the last year, an award which will doubtless work wonders for staff moral within a company frantically attempting to put a positive spin on a pretty rotten day on the markets.

The situation now is dangerous but we are able to offer a slight glimmer of hope. The immediate situation suggests ongoing weakness below 73p should find its way to 63p next and hopefully, exhibit a bounce.

Once again, we advocate extreme caution of 63p breaks as any bounce is liable to be short lived. Instead, there is potential for freefall down to a bottom (hopefully) at 28p.

In our opening paragraph, we mentioned a "dodgy chart pattern", something easily missed as it covers the period since 2003. The chart below shows the price has experienced a painfully clear double top from 2003 to 2015.

Some people swear by this sort of thing, most people swear at this sort of thing, but there is always the risk of pattern believers creating a self-fulfilling prophecy.

In the case of Centrica, it calculates with "ultimate bottom" down at 12p. We suspect most folk will be happy to fill up with Centrica shares if it ever actually achieved such a ridiculous number but, in the grand scheme of things, our own potential of 28p is pretty blooming close.

To get out of this mess, Centrica needs to exceed 108p at present.

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.