Lloyds Banking Group PLC (ADR) (NYSE:LYG) – Technical buy above $5.00 levels

Lloyds Banking Group PLC (ADR) (NYSE:LYG), one of the major banking and financial service provider in the UK, ended the session nearly unchanged with a minor loss of 0.2% only but the jump in volume may turn out to be significant. The volume spiked at 11 million against the daily average of 3.3 million only, also the highest daily volume in the last 6 months. Price action in the next few sessions will show if that is the distribution by the smart money.

Does this analyst foresee a long-term upside in LYG?

Lloyds Banking Group PLC (ADR) (NYSE:LYG) has seen a very small drop in its profitability with the gross written premiums dropping to 25.3 billion pounds in 2015 from 25.6 billion pounds in 2014. A plethora of natural disasters and challenging market conditions can be blamed for this reduced profit. On the other hand, the abundance of capital available at low interest rates has certainly helped the company. The company has big plans on expanding and has already opened branches in China and Dubai. A few legislations passed by the Indian government allowing onshore operations in India would also help the company to establish its presence there.

Lloyds Banking Group PLC (ADR) (NYSE:LYG) will increase lending for large scale housing developments as the residential projects remain far steadier compared to the shrinking investment property margins. Credit for incoming producing properties is not generating that much margin.

Technically, the stock has been in an intermediate downtrend for the last 12 months, with the consistently lower highs and lower lows marking the trend clearly but the structure in 2015 is giving a hint of a probable trend change. A bullish Inverse Head & shoulders pattern has been developing on the charts and a break above $5.00 levels would trigger a big rally on the upside. If the breakout takes place, the initial target would be $5.30 and $5.50.

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John is a special projects and general assignment reporter, noted for breaking several exclusive stories.

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