Lloyds looking technically bullish ahead of full-year results

[MongiIG]

A potential bullish reversal is taking shape in the Lloyds share price ahead of Thursday’s full-year results.

Source: Bloomberg

 Axel Rudolph | Market Analyst, London | Publication date: Wednesday 23 February 2022 

Lloyds Banking Group, the UK’s largest mortgage lender, is bouncing off key support and looks technically bullish ahead of Thursday’s full-year (FY) results.

The banking group, which consists of the Bank of Scotland, Halifax and Scottish Widows amongst others, is widely regarded as a good proxy for the UK economy because of its 30 million customers and exposure to British consumers.

According to Reuters, Lloyds Banking Group is expected to show profits surging to £7.2 billion, up from £1.2 billion in 2020, as the bank benefited from the release of some of its £4.2 billion in loan provisions, set aside in 2020. Figures should be boosted by lower charges for bad debt, as borrower defaults proved lower than anticipated, and by increased mortgage borrowing in the wake of the UK economy bouncing back in 2021.

The Lloyds share price may be further boosted when the new CEO, Charlie Nunn, will lay out his strategy for the retail lending giant and explain where he sees future growth areas.

Source: ProRealTime

 

Last year’s share price rise of some +35% came on the back of the bank benefitting from the boom in mortgage lending seen during the pandemic, but this may soon diminish as UK interest rates rise in the face steep energy and consumer price rises.

From a technical perspective the fact that the stock bounced off its late January low at 49.25 pence shows that despite ongoing geopolitical tensions between Russia, Ukraine and the West, provoking the recent sell-off, buyers remain in control.

Source: ProRealTime

 

Therefore, provided that the late January and February lows hold, the odds favour an eventual advance to above the 55.96p January high unfolding.

First the two-month resistance line at 53.25p will need to be exceeded, and then the early and mid-February highs at 53.96p to 54.50p.

Source: ProRealTime

 

Above this year’s high lurks the 58p to 63p region which has been capping the share price since 2016 and should prove difficult to overcome.

Failure at the 49.25p to 49.11p recent lows would negate the bullish outlook, and instead lead to the 200-day simple moving average (SMA) and 2020 to 2022 uptrend line at around 47.75p being revisited.

Further down the December trough can be spotted at 44.31p.