Persimmon Share Price Slides 6% to major Support: Does it hold?

Summary:

The Persimmon share price (LON: PSN) came under heavy fire this week, dropping to a six-month low of 2,666p this morning.

The Persimmon share price (LON: PSN) came under heavy fire this week, dropping to a six-month low of 2,666p this morning. Since setting a post-pandemic high of 3,272p in June, the FTSE-Listed homebuilder has struggled. The share price has been trending lower for the last three months, losing more than 18% from the 2021 peak. This comes despite the company’s well-received H1 trading update.

In August, Persimmon plc revealed pre-tax profits increased by 64% in the first half of 2021. Furthermore, management appeared optimistic for the rest of the year, even in light of a reduction in stamp-duty tax breaks. Nonetheless, the Persimmon share price has failed to break out of its downward rut and with the price now at a major support level, things may be about to worsen.

PSN Price Forecast

The daily chart shows the share price is trending lower in a wide parallel channel. Currently, PSN is testing the lower end of this trading pattern at 2,660p. So far, the trend line is holding, and the price is finding some support and attempting a recovery.

However, this is a significant support level and should the price drop below the trend, it could encourage long liquidation. In this instance, the price sees initial support between 2,530p and 2,590p. However, an extended decline could target the Q3 2020 low of 2,250p.

That being said, the considerable trend support may stem the decline. If the Persimmon share price can hold this support level, it may signal a turnaround, Although, until the price clears the 200-day moving average at 2,883p, the downside should prevail.