Lloyds Bank logo and branch sign, North Street, Bishops Stortford, Hertfordshire, England
Lloyds share price started the week in the red, shedding a marginal 0.31% to trade at 48.575 in the early hours of trading. The bank’s share price ended the last week on a positive note, after recovering from Thursday’s losses of -1.49% to register a marginal +0.84% on Friday.
Lloyd’s share price has risen by about 40% since the year began. However, the bank could have possibly done better had it not been for two factors that have held it back. First, the regulation of dividend issuance has meant that the bank cannot determine its own dividends.
Were that to change, then investors could possibly have considered the P/E ratio to influence their decision to buy the bank’s shares. In the absence of that, the field has been really tough for a bank whose P/E ratio was 17 times as recently as 2019. Secondly, interest rates haven’t been friendly to banks for a long time.
A zero-interest rate policy has been in effect since the financial crisis hit in 2008. As a result, banks like Lloyds are no longer authorized to charge borrowers as much money. This environment appears to be undergoing a transformation right now. In the coming six months, there is speculation that the Bank of England will raise interest rates. By raising interest rates, Lloyds may be able to increase revenue and increase its profitability.
Lloyds share price has been on an ascending trajectory over the past three trading sessions. This is in line with the weakening market momentum, which has progressively reduced from 67 to the current 59 according to the RSI indicator. If the momentum continues to weaken, we are likely to see Lloyds share price reduce further to establish the first support at 48.040p. If the bears keep up the pressure, the second support is likely to come at 47.155p.Beyond that point, the price trajectory could be headed to the formation of a descending scallop, with the support coming at the would-be neckline at 46.565p.
However, with the RSI at 59, the momentum is still strong enough to support bullish control. In That case, the share price is likely to rise marginally, to encounter resistance at 49.035p.