Lloyds (LON: LLOY) share price is finally catching a bid after a major sell-off in the last few weeks. The UK bank tested the yearly low last week at 42p after releasing weak earnings reports. The shares are currently changing hands at 42.325p.
Today’s positive price action can be explained due to the signs of recovery in the FTSE100 Index. The index saw plummeted by 5% last week due to the disappointing economic report by China. On Monday, the index rose 0.5% above its previous close but then started to correct again.
Two Lloyd Banking Units, Black Horse and Motonovo Finance, are being sued for charging higher interest rates to customers looking to buy secondhand cars. The total worth of the claim is around £1 billion. Lloyd share price might tumble significantly if the bank loses the lawsuit.
Lloyds released their Q2 earnings showing a pre-tax profit of £3.9 billion, below the expected £4 billion. Despite this, Barclays analyses that Lloyd’s long-term earnings look good despite posting results less than the consensus. As a result, Barclays rated the rival bank’s shares as overweight.
In my previous analysis for LON: LLOY, I discussed a heads and shoulders pattern that was forming. The price still hasn’t moved much since last week. But I still expect a further correction in Lloyds share price.
My Lloyds share price forecast remains bearish as the price is still trading 4% below the neckline. There is a strong chance for the shares to plunge to the 38.5p support level. To see any strong bullish movement in the price, a reclaim of 44.6p as a support level is extremely critical.
In the meantime, I’ll keep sharing the updated Lloyds stock forecast and my personal trades on my Twitter, where you are welcome to follow me.
This post was last modified on %s = human-readable time difference 15:52