Taylor Wimpey Share Price at Risk of a 12% Slump to 160p

Summary:

The Taylor Wimpey share price is at risk of a major slump to 160p. We explain why this could happen and what to expect next

The Taylor Wimpey share price has retreated after the company reported its sales report today. The TW stock has fallen for the past three consecutive days and is trading at 183p. At the same time, the Persimmon share price has risen by 0.15% while Barratt Developments has declined by 0.17%.

Taylor Wimpey news: Taylor Wimpey is one of the biggest homebuilders in the United Kingdom. The company builds thousands of homes per quarter and has been a key beneficiary of the ongoing low interest rate environment.

However, there are concerns about how this growth will continue as the UK reopens and the Bank of England starts to tighten. The government is also expected to remove some of the homebuying incentives it has put in place.

In a report today, Taylor Wimpey said that its sales rate and order book have risen this year. Sales between January 1 and Sunday this week rose by 1% from 0.9% in the same period last year. At the same time, the cancellation rate declined to 14%. Its order book stands at more than $3.91 billion. As a result, the board suggested a 4.14 pence dividend.

Taylor Wimpey share price forecast

The daily chart below shows that the TW share price is in trouble. While the stock has been in an overall bullish trend recently, a bearish signal has emerged. The stock has formed a rising wedge pattern that is shown in red. In technical analysis and price action, this pattern is usually a bearish signal. In fact, the price has moved below the lower side of this wedge pattern. It has also moved below the 25-day exponential moving average (EMA).

Therefore, in my view, the stock may soon drop to the 200-day EMA at 160p, which is about 12% below the current level. To do this, it will need to move below the 100-day EMA at 170p. This prediction will be invalidated if the price manages to move above 190p.