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The Company shares have not been going in a clear direction since the middle of June 2012. After a recently bear market, Lloyds Group’s stock has been raging in a vivid equilibrium zone till now. Nonetheless, there is an interesting formation on the company price chart as explained below, for further southward plunge has been clearly halted, while bulls and bears are currently engaged in a battle of wits. Could this prove pyrrhic in the long run, or would the bulls come out home and dry? Even there are prices that go significantly upwards in an overall bear markets, for what happened in the past will always happen again.
Technical Forecast
As I said earlier, Lloyds Banking Groups has been generally bearish so far in 2012. The southward move happened especially from the middle of March until the beginning of June 2012. The price went moderately bullish after this – until June 18, 2012. Since then it has been moving sideways (till now). Technically, there are two horizontal lines drawn to underline the recent price action on the chart. The upper line stands around 32.50 while the lower line stands around the price level at 29.00. This shows that the shares are in a vivid equilibrium zone. There have been several tests of the upper and lower lines, with no clear breakouts above or below any of them. Those breakouts in price had been bogus and spurious: a trap for neophytes. It is good to stay out of this market until a candle closes above or below one of the horizontal lines, while another one appears outside the ranging zone.
Studying the present market situation of the stock (LSE:LLOY), the Relative Strength Index period 14 is above its level 50 and pointing up slightly towards the level 60. This signifies that it is more likely for the price to break out northwards, because the bears’ pressure seems to have been halted as buyers are re-gaining their stamina. At the time of writing this article, the price was at 31.3. There are support levels at 31.00 and 30.50. At the upside, there are resistance levels at 31.50 and 32.00 (hurdles the price would need to overcome if the price is to trend upwards).
Conclusion: Trading gurus have realized long ago that prices are pushed by dread, misgivings and avarice – exactly the feelings that push some people to violence. Price movements invariably portend the general opinion concerning the worth of some financial instruments, though their mean deviations correspond to the bid and ask prices. Traders would sometime give up part of their portfolios making retracements negligible and would prefer to make it an insider’s secret.
This article is ended with the quote below:
“The most important thing in trading is risk management, not leverage. If the risk is under control, the profits will come sooner or later.” – Gabriel Grammatidis
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