Why BT shares are flirting with 'real trouble'
Not for the faint-hearted, our analyst thinks BT's true direction will be revealed in the next week.
6th March 2019 09:40
by Alistair Strang from Trends and Targets
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Not for the faint-hearted, our analyst thinks BT's true direction will be revealed in the week ahead.
BT Group (LSE:BT.A)
If ever a share exhibited the price reacting to (and confirming) a trend, BT (LSE:BT.A) certainly fills the bill.
The red line on the chart, dating back to March 2009, has been gently caressed in the last few sessions (see inset), never sufficiently to become a #MeToo candidate... But make no mistake, BT is flirting with the edge of some real trouble.
The immediate problem is fairly straightforward. Movement anytime now below 212p risks reversal to 200p, a point where some sort of bounce can be hoped. The bigger issue comes, should the share manage to close a session below 200p as it ticks a pretty major box pointing at future reversal down to 99p eventually.
It would be churlish not to admit there are potentially a few points where some sort of bounce will occur on the way down - we'd already suspect 200p to provoke something short lived. But if broken, the next bounce level calculates as 167p but realistically, hope would leave the building until it approached the 99p level.
However...
If we take cognisance of the respect paid to the long term uptrend, it's very possible to imagine a scenario where BT could display some surprise recovery potentials. Unfortunately, key to this proposal is a requirement the share price be "gapped" up anytime soon, preferably to above 224p.
A movement such as this will almost promise growth in the future to an initial 253p with secondary, if (when) beaten, at 264p. In the event the price achieves 264p, we shall need revisit the numbers.
We'd submit BT should be worth watching in the week ahead as it looks close to revealing its direction.
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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