- Summary:
- Lloyds share price has the hallmarks of a stock poised for further gains, but the banking giant needs to come clean on a key risk factor.
Lloyds share price rose on Thursday, gaining 1.3 percent in the mid-morning session to trade at GBX 57.84. The banking giant has had a torrid start in September, and has lost 1 percent of its share price value in the last five trading sessions. However, Lloyds (LSE: LLOY) has a strong underlying bullish momentum, with 4 percent in monthly gains, and is up by 20.6 percent YTD as of this writing.
The bank is technically a penny stock, but a market capitalisation of £35.7 billion means it is among the largest listed companies at the London Stock Exchange. This is a strong value proposition, especially in view of its decent profits in recent times. Also, the Bank of England is unlikely to cut rates in September, and that will help Lloyds share price stay on the upward trajectory driven by a stable revenue outlook.
On the downside, however, Lloyds Bank stares at the prospect of a potential multi-million pound penalties by the Financial Conduct Authority (FCA). The UK’s financial regulator has opened investigations into claims of widespread car finance mis-selling involving banks. With claims logged so far exceeding 15,000, Lloyd’s position as the largest car loan lender in the UK predisposes it to potential massive penalties.
Lloyds share price forecast
Lloyds share price is on an upward momentum, signified by the price movement above the Volume Weighted Moving Average (VWMA) level on the 2-hour chart. However, the RSI indicator is at 48, signifying a strong fightback by sellers, which could slow down gains. The buyers need to stay above the psychological round figure of GBX 58.00 to sustain the upside.
Meanwhile, the 30-minute chart calls for the upside above the pivot mark at 57.70. That will favour movement to 58.00. where the first resistance will likely be encountered. However, if the bulls manage to strengthen the upside momentum, they will be able to break above that hurdle and stay on course to test 58.30.
On the other hand, a move below 57.70 will hint at the onset of bearish control. The downward momentum will likely find initial support at 57.40, but they could break below that level and go further down if they extend their control. In that case, the upside narrative will be invalid, and the price could go on to test 57.00.
