Lloyds Bank shares must do this before any major breakout

Lloyds Bank (LSE:LLOY)

It’s time for our monthly visit to Lloyds Banking Group (LLOY) where we shuffle words around to try disguise the fact we’re saying the same thing we’ve said for the last few months. Oddly though, this time we are saying it with a vague expectation something is about to happen.

To sprinkle some sanity on our optimism, the blue downtrend since 2015 is currently around the 69.07p mark and, from our perspective, drooling over the Lloyds share price is not permitted until such time the share actually closes above this line.

Until then, we’d regard unbridled optimism as a touch dangerous. However…

On the 13th December, Lloyds did something a bit odd, confirming that the forced upward nudge last week was indeed an effort to shock this price out from hibernation.

The immediate position is therefore fairly interesting, as now a mid-price bettering 67.75p should prove capable of moves to an initial (fairly inconsequential) 68.9p.

Quite critical, again from our viewpoint, shall be any moves bettering 68.9p due to this calculating with 70.5p and a fair degree of hope the price intends close above ‘blue’.

While the lords of gullible will suggest the share price will execute a major breakout manoeuvre, we rather suspect the 74p level will provide some stutters in any future rising cycle, given the glass ceiling which still exists since the start of 2016.

Common sense indicates only with closure above 74p dare we suggest drooling optimism as there’s very little to inhibit another 30% growth cycle commencing.

Of course, the price is not yet safe, so we are indeed recycling several months of reports. If the market now finds an excuse to stuff this below 64p, we’d be inclined to a panic update of this report.

We cannot be the only folk noticing the head and shoulders (h&s) formation formed since the start of 2017.

While most chart patterns are utter tosh, if you consider the logic behind buy/sell patterns which provokes a h&s (confidence, more confidence, less confidence, even less confidence, run for it!) the concept actually makes sense. Of course, the market also knows this and thus, closure below red would make sense before taking this pattern too seriously.

 

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. 

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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