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Lloyds Share Price is Down by 4% Today – But Bullish Momentum Remains

EURGBP

Lloyds Share price is down by more than 4% today, becoming the second worst-performing stock in the FTSE 100. Other UK banks like NatWest and Barclays are also among the worst-performing firms in the index ahead of an important speech by Rishi Sunak.

Lloyds is the second-worst FTSE 100 component today

Lloyds Bank shares have been on an upward trend recently. Since September, they have climbed by more than 63%, making Lloyds one of the best FTSE stocks to invest in.

The rally has been because of the extended government support, including the furlough program and other stimulus packages. The recent optimism about Brexit has also helped push Lloyds and other banking stock higher.

Most importantly, Lloyds reported an excellent quarter, boosted by the strong mortgage market in the country and low delinquencies. It has also announced cost-cutting measures that include more than 1,070 job cuts.

Today, Lloyds share price is falling as traders wait for a speech by Rishi Sunak. According to media reports, the chancellor of the exchequer is expected to boost spending even as the country’s national debt continues to soar. He is also expected to announce a £4.3 billion rescue package to support the unemployed.

Still, in the long-term, analysts expect that Lloyds shares will continue doing well for several reasons. First, the bank has a strong balance sheet and a good tier-1 ratio, which means that it will resume its dividends in 2021.

Second, the vaccine, which has come earlier than expected, means that the BOE will not implement negative rates. Third, after going through the pandemic, analysts believe that Lloyds will emerge at a stronger position. Most importantly, there are hopes that the UK will reach an agreement with the EU on Brexit.

Lloyds share price technical outlook

On the daily chart, we see that Lloyds shares have been on a steady upward trend recently. It reached a high of 40.80 as I had predicted in this article. Today, the price has reversed and is now trading at 37.90. It remains above the 25-day and 50-day exponential moving averages and the important support – June high – of 38.09.

Therefore, I believe that the bank’s shares will continue rising as bulls aim for the 38.2% Fibonacci retracement level at 42.78. However, a deeper dive below the 23.6% retracement at 35p will invalidate this trend.

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Lloyds Bank technical chart

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