Lloyds share price is presently up 0.18% on the day as stocks aim to extend Tuesday’s rebound following the easing of coronavirus fears as well as the bearish comments by UK Pm Boris Johnson on trade between the UK and EU made on Monday.
The bank, which has recently announced it would close 56 branches and cut more than 80 jobs in the process, is in the process of a major restructuring to cut costs and become more competitive in the wake of the near-total divestment of the UK government from its ownership.
Lloyds share price has shed close to 30% of its value since the Dec 13 sale by the UK government. The bank has already closed 569 branches in the last four years, and it argues that the process of closing more offices is to enable it to cut costs as customers shift to online platforms for regular banking activities.
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In shaking off coronavirus fears, today’s intraday gain has taken Lloyds share price back to the top of the downward sloping channel. This move keeps the price in a consolidation pattern that has started to take on a defined bearish flag pattern. The flag portion of the pattern has breached the ascending trendline which connected previous lows of Lloyds share price from October 2019 to January 2020. The fundamentals for the bank continue to remain bearish, with divided consensus among market players on the price outlook for this stock.
The expected resolution of the bearish flag is for the price to extend the move below the flag, but this would require a double successive candle close below the channel. This breakdown move would also break the 56.10 support (27 June and 8 Nov 2019 lows) and would open the door for Lloyds share price to target the 52.56 and 50.44 support targets, in that order. A move to 50.44 would complete the downside measured move from the flag.
On the flip side, price recovery above the 58.57 resistance breaks the flag to the upside and invalidates it, which allows 61.87 and 63.97 to become possible new targets for such a recovery move.