Persimmon Share Price Set for Further Slide

The Persimmon share price has resumed the slide, down 3.37% this Friday as fears of a housing market slowdown continue to plague the UK market. Rising inflation and rate hikes by the Bank of England have seen house prices hit record highs in the UK, with many unable to afford new mortgage rates for financing new homes. 

InvestingCube's S&R Levels

FTSE100

FTSE100 (7031)

In Profit

STOP

SELL

TP1

7146

TP2

7127

This outlook appears to have played out on the Persimmon share price, which has taken a hammering after it released dismal first-half earnings on 17 August. The company saw its pre-tax profits fall by more than 8% for the first half of its fiscal year to 439.7 million pounds, while revenue for the same period fell by the same percentage level to 1.69 billion pounds. 

The company continues to bank on strong demand to rescue its full-year targets. It forecasts that there will be a robust demand for new homes and has dispelled fears that the housing sector could face a slowdown that would hit its bottom lines. Persimmon continues reaffirming that it will meet its full-year target of building 14,500 to 15,000 new homes. 

This positive sentiment is yet to be shared by investors at the moment. From the standpoint of technical analysis, the bearish flag on the chart points to a further slide which could take the stock much lower. 

Persimmon Share Price Forecast

The completion of the bearish flag following the 31 August closing penetration below the flag’s lower border has opened the door for a measured move that is expected to find completion at the 1178.5 support level (27 June 2016 low). For this target to be attained, the bears must degrade the 1287.5 support formed by the previous low of 6 July 2016. 1047.5 is an additional harvest point for the bears if there is further price deterioration. 

On the other hand, a recovery beyond 1533.0 (24 August low and 30 August high) is required to invalidate the bearish outlook. This scenario sees an open door for the bulls to aim for 1716.0 (17 August low). 1809.5 and 1919.5 are the previous borders of the range that lasted from 21 July to 16 August, forming the sequential upside targets for the bulls.

Persimmon: 4-hour Chart