Outlook for Lloyds Banking Group plc, Royal Bank of Scotland Group plc share prices

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Category: Financials

Published on Friday, 21 September 2012 09:40

Written by Sam Coventry

Technical indicators are painting a mixed picture for the share prices of both Lloyds Banking Group and RBS.

Lloyds Banking Group plc (LON:LLOY) shares have seen their Relative Strength Index (RSI) head above 70. This is a significant level because as stocks approach this number they head into 'overbought' territory.

The RSI is a momentum indicator that compares the scale of recent gains to recent losses in an attempt to determine overbought and oversold conditions.

That does not however necessarily mean Lloyds shares are a Sell.

Over at Trading Central they areadvising that the upside for Lloyds should prevails as long as 38 is support.

There are other indicators apart from the RSI that are to be considered.

Trading Central say: "The MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 35.25 and 32.43). Finally, Lloyds Banking Group is trading above its upper Bollinger band (standing at 39.5). Lloyds Banking Group is currently trading near its 52 week high reached at 40.93 on 14/09/12."

Royal Bank of Scotland Group plc (LON:RBS) stock is also trading with an RSI above 70. Again though Trading Central advise that the upside prevails as long as 257.25 is support.

"The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at 236.21 and 221.74). Finally, Royal Bank Of Scotland Group is trading above its upper Bollinger band (standing at 270.47)," say TT.

This morning we note markets are broadly firmer and should this tone continue we would expect both banks to end the week off on a high.

UK equities are trading higher this morning as buying resumes for high-beta commodity stocks.

Although up in early trading, US indices closed relatively flat on the session as weak economic reports dampened investor sentiment.

Asian stocks closed higher on the day bouyed by continued positive sentiment after recent central bank action.

On the currency markets we see GBP/USD pulled lower during the trading session but bounced to close just short of the highs. Despite the overbought nature of sterling in the near-term, the dollar remains under pressure.