Taylor Wimpey Heading for Further Resistance?

Taylor Wimpey Plc operates as a residential developer and the company operates at a local level from 24 regional businesses throughout the United Kingdom and also has operations in Spain. The operate through different segments which includes Housing United Kingdom and Housing Spain. They build a range of homes in the UK including apartments to six-bedroom houses in the price range of under £70k to over £3m. They have the purpose of building great homes and creating thriving communities.

Over the past five years Taylor Wimpey Plc have returned approximately 21% and have become one of the leading developers within the UK market. They currently have a market cap of approximately £6bn and a P/E ratio of 26.46x. This could potentially indicate that their share price is slightly overvalued and it is often considered that a P/E of over 20x is overvalued. They have been trading within a descending channel on the daily chart which is demonstrated in the chart below.

They have been trading within the descending channel since around April time which could indicate a potential change in direction of the price. They have seen a rebound in today’s price as it approached the 61.8% level which acted as a support level. It will be interesting to see if the price remains within the descending channel as it approaches the next resistance level as demonstrated by the red dashed line. If the price respects this resistance level, then we can expect to see the price decline further within the channel. Although, if the price breaks these levels and moves out of the channel then we can expect the price to continue moving up. One we will be keeping an eye on over the coming weeks.