Lloyds share price is up on the day even after the UK’s largest bank declared a 27% drop in operating profits for 2019. Pre-tax profits dropped to GBP4.4 billion, which met analysts’ expectations as the bank has had to grapple with compensation payments to customers who were misadvised on insurance protection as well as an increase in bad loans. Lloyds bank also had to cancel a planned buyback of its shares that would have seen 650 million pounds worth of shares reacquired from shareholders by the bank.
However, Lloyds share price was able to bounce on the day after CEO Antonio Horta-Osario provided reassurances. Lloyds is the largest provider of home loans in the UK, and its health is seen as a barometer for the UK economy. CEO Horta-Osario affirms his belief that post-Brexit, the UK now had more definite direction and that the UK economy remained “resilient”.
Horta-Osario himself has had to ensure a cut in his compensation as part of significant restructuring being carried out by the bank. Recall that the UK government sold off a substantial chunk of its holdings in Lloyds bank in December 2019, prompting a steep fall in Lloyds share price all through that month and in January 2020.
Lloyd share price is in the midst of a consolidation area within the context of the bearish flag on the daily chart. Today’s Lloyds share price move was a bounce from the lower boundary of this consolidation area.
As Lloyds share price continues to trade within this range, this could provide short term range-trading opportunities.
The bias for this stock remains bearish, and if price breaks below the consolidation area as is expected of the flag pattern, we could see Lloyds share price target the 52.56 support area. However, a breakdown confirmation of the flag’s lower border is required. This confirmation could come from two successive candle penetration closes below the 55.47 price level.
On the flip side, recovery beyond 58.47 breaks the upper boundary and negates the downside move, putting Lloyds in line for a run towards 60.34 in the first instance.