A plan by Bank of Ireland to buy back bonds has seen its share price rise 27 per cent despite reporting a collapse in pretax profits to €7 million and lifting its expected three-year bad debt charge to €6 billion.
The buyback programme also overshadowed an announcement that chairman Richard Burrows would step down at the annual meeting in July.
Irish Times
Shareholders have given this latest news a thumbs-up which has also helped other Irish banking share prices. But where can Bank of Ireland go from here?
Until the start of May, Bank of Ireland had been struggling to challenge €1.00 resistance. The eventual break on May 6th, albeit on very low volume (surprising considering) was the prelude to the advance seen today. Those brave souls who bought at €0.12 as recently as March must be feeling very good about themselves.
In terms of volume, the bulk of the buying occurred in the €0.40-€0.95 range and this should be the zone with the greatest level of support should the current rally run out of steam (an excellent example of resistance turned support).
Going forward the next major congestion level is around the €4.38 and €6.36 zone but there is a resistance level at €2.30 which needs to be tackled first. It will likely be a long journey to get there but as long as Bank of Ireland can stay above €1.00 there is hope.
For Allied Irish Banks it's a different story. Today's news as helped add another 14% to AIB's share price but a larger hurdle remains as to its range bound action between €0.74 and €1.36. Even when this clears it will run into significant supply level at €1.67. Only when the latter breaks (if it breaks) can one start to consider the long term prospects for the bank.
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website
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