Barratt Developments: Imminent triangle breakout targets 350p

While the housing market is clearly still one of the main topics of conversation at dinner parties, and continues to hold up despite a fall in mortgage approvals by a fifth in August, the real issue is perhaps whether the rebound for housebuilders can continue…

Barratt Developments (BDEV): Imminent triangle breakout

The performance of housebuilders for 2016, and especially in the run up to and aftermath of the Brexit vote, is something which will almost certainly keep me amused and entertained, at least inwardly, for quite some time. This is because we have a situation where leading to June 23, the market was behaving as if it genuinely feared there would be a “surprise” Brexit vote. In contrast, as soon as the vote was over and the markdown in the likes of Barratt Developments was over, it seemed as if investors were not too bothered about the result or even the consequences. The present position on the daily chart shows the way that it is possible to draw a relatively large triangle formation here from as long ago as the end of May. The main point to remember here is that according to charting rules triangle formations are continuation patterns for the trend. In this instance one would therefore be gunning for the idea that there will be a break to the downside, especially with an end of day close back below the 50 day moving average at 459p. The target then could be as low as the July floor under 350p – or even lower. At this stage only back above the 200 day moving average at 526p really kills the idea of fresh bearishness.