Taylor Wimpey is a British developer that operates in the homebuilding industry and runs businesses in the United Kingdom and Spain. Taylor Wimpey’s share price consolidated in the last three months or so in a horizontal pattern, unable to break above the key GBP172 level.
Ahead of the Q4 2020 results, the pressure mounts against the horizontal resistance, especially since the homebuilding industry survived quite well the pandemic shock due to the attractive financing conditions as a result of monetary easing from central banks.
Taylor Wimpey will release the Q4 2020 earnings and the full 2020 results on March 2nd, 2021.
The market participants expect a decline in revenue to $3.9 billion, about 30% less when compared to the same period one year ago. However, the recent developments in the fight against the pandemic bring optimism in the gradual recovery of key industries, and so we should not be surprised that investors focus on forward-looking metrics.
For example, the forward price to sell ratio is expected to come out at 1.93 on next week’s earnings and to fall dramatically moving forward due to increased sales in 2021.
Taylor Wimpey’s share price formed a horizontal consolidation that may just be the consolidation of a bullish flag pattern. From a technical perspective, the consolidation can be treated in two ways.
One is to trade just the channel’s breakout – that is, to wait for the price to break the upper edge of the channel and to target the channel’s length.
Another is to trade it as part of a bullish flag. In this case, the projected measured move points to a much higher level for Taylor Wimpey’s share price.
In both cases, investors are better off waiting for a breakout. On positive earnings and a bullish market reaction, investors should wait for the close of the business day and see if the price cleared the key area and closed above. If yes, the measured move acts as a target, while the lower edge of the consolidation as a stop-loss.
On the flip side, if Taylor Wimpey’s earnings disappoint and the market breaks support at the lower edge of the channel, the bullish scenario is off.
Taylor Wimpey’s business did not remain unaffected by the health crisis. Also, Brexit plays a crucial role in its future operations as it handles many projects in Spain, inside the European Union. In an effort to cope with the crisis, Taylor Wimpey laid off part of its labor force to strip out GBP15 million in costs. Taylor Wimpey’s share price remains bullish while inside the horizontal channel, and on a breakout on positive earnings, investors will try to give it another push higher.
The post Taylor Wimpey Share Price: What to Expect from Q4 2020 Earnings? appeared first on Vantage Point Trading.
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