FTSE 100
Lloyds share price has been able to shake off the negative ratings applied to Lloyds bank and 5 other UK banks from Moody’s. It is currently trading 0.87% higher, despite Moody’s downgrade of the UK’s sovereign debt from Aa3 to Aa2 and that of the bank’s long-term deposits, issuer ratings and senior unsecured debt from Aa3 with a negative outlook, to A1 with a stable outlook.
Likely, investors had already priced in the latest downgrades, given that Lloyds Bank has had a challenging year. It has had to cope with the effects of the coronavirus on its business in 2020. The Bank of England slammed a freeze on dividend payments, and the bank had to set aside billions of pounds to cover bad debts due to the coronavirus. It is also just dealing with the issues of compensation stemming from the scandal around its HBOS subsidiary
Recall that the UK government sold off nearly all its holdings in the bank in December 2019, setting off a bearish trend from which the stock is yet to recover.
Lloyds share price is now testing the 27.47 resistance level once more, building from the outlook on the stock I provided some time ago in which I indicated a possible pullback to the channel’s upper edge and possible bounce that would enable this retest.
This week’s daily candles have shown progressively higher lows, while the Tuesday, Wednesday and Thursday candles have shown higher highs. This raises the chances of a breakout from the 27.47 resistance, which allows Lloyds share price to attain the 28.760 resistance as the initial upside target. Further advance targets 29.765, with 31.250 remaining relevant as a future target if buyers keep pushing the momentum.
On the flip side, if the price action falters at the 27.47 resistance, then we may see yet another pullback to the channel’s upper boundary. At this stage, a pullback towards 25.875 cannot be ruled out. A further decline sends Lloyds share price towards 24.745 and possibly 23.930, where the 24 September low lies.
