Lloyds

Hi Amo,

Let's see if the trade even works out first!

There are loads of supports - uptrend support, the wave 4 low support at 46.08p, a few gap supports...

I'd normally look to the 38.2% and 61.8% Fibs as support areas from an EWT point of view and then I'd see if there are any price supports near those. The 46p support is, in fact close to the 38.2% Fib assuming it tops near here.

We can't look at downside targets until we've found the top and let's remember that LLOY is actually in an uptrend so this is an attempt to catch a reversal which is very dangerous.

Hi Jackozy,

You got a target in mind based on EWT?

Thanks
Amo

This now looks to me like it's in wave 5 of 5 up from the 21p low so I'm going to short it at the 57.7p gap (58.02 if you use the close rather than the low for the gap):



dl.dropboxusercontent.com/u/20815047/LLOYdaily09_05_13.gif

The RSI is also at the long term bear div downtrend which gives me added confidence. Note that this divergence started a long time before the top of what looks like the wave 3 top and the current RSI is higher than it was for that top. It'll be interesting to see which way it pans out from here...

Really appreciate your thoughts and for taking the time to reply in such depth.

Your a star and would love to be able to buy you a few beers one day.

Many thanks

SRB

Hi SRB, sorry for not seeing your post and getting back to you.

First, we need to seem to have only had 3 waves up from the trendline so far so we'll need to make some assumptions. Here's a chart with a possible count on to help us:



dl.dropboxusercontent.com/u/20815047/LLOYdaily02_05_13.gif

The double trendline bounce at point 4 appears to have been waves i and ii of 5 up, the gap up to the trendline breakout failure seems to have been iii of 5 so we might have started wave v of 5 from today's gap fill.

If this is the case then it's likely that there'll be a move towards the 60.86 resistance or the 63.4p one, both shown, though a 5th wave can fail and come up short (the trendline might casue this here).

Where ever it does top out at, there looks to have been a clear 5 waves up from 21.63 so we need to look at what happened before that to see what level of retracement we could expect from the new high. Here it gets messy as there's no clear wave structure between 2009 lows and the 21.637 low. However, 21.637p was a significant low so it seems most likely (to me) that the sequence up from 21.637 is a wave 1 of some degree or other (either a wave 1 or a subwave 1). In that case we could expect a possible 50-61.8% retrace. Even if it's a wave 4 of some degree then we should get c. 38.2% retrace.

Based on that, and assuming for argument's sake a top at 60.86p to coincide with your statement re govt intentions, I'd look to the following chart for those retracements:



dl.dropboxusercontent.com/u/20815047/LLO...yretrace02_05_13.gif

Note how both the 38.2% and 61.8% Fibs coincide exactly with natural supports if we assume that top at 60.86p. Note also, however, the weekly candle - a possible shooting star at 2 known resistances - so the top may already have formed.

Hope that helps.

Oh forgot to mention 63.00 might be a tad high Remo as the government was talking about offloading at 61p.

SRB