Lloyds, the largest digital bank and financial group in the United Kingdom, is about to release its full 2020 earnings. The Q4 2020 earnings are strongly expected to impact Lloyds share price. Lloyds operates in the financial sector and is active in three segments – insurance and wealth, commercial banking, and retail. Its share price is up over 10% YTD but still down 25% in the last year.
When Does Lloyds Report Q4 Earnings?
Market Expectations from Lloyds’s Earnings Statement?
The market expects YoY revenue growth to decline -11.36% to 20.68 billion. Any positive surprise should be enough to trigger more upside in a stock price already up for the year. Also, the technical pattern helps the bullish case too, but some caveats do exist.
Lloyds Shares: Technical Analysis
Lloyds share price reached a low in October of last year, after being affected by the COVID-19 pandemic. Non-performing loan provisions affected profitability, and the decline was inevitable, as seen throughout the financial sector.
However, the move lower was followed by a quick bounce. Moreover, the bounce stopped more or less at a similar area when compared to the previous consolidation before the dip in October. More precisely, the market formed an inverted head and shoulders pattern – a bullish reversal pattern.
The black horizontal line in the chart above acts as the pattern’s neckline. The measured move of such a pattern is the distance from the head to the neckline, projected from the neckline. It acts as the minimum distance that the market must travel, should the price break and close above the neckline.
In fact, this is the main condition for the pattern to act as a reversal. Therefore, on a positive surprise on the Lloyds Q4 2020 earnings, bulls should wait for a daily close above the neckline as a confirmation. On the flipside, in the case the earnings disappoint, the market should find support at the lowest point in the right shoulder’s formation.
What Is the Outlook for the Lloyds Share Price?
There is still uncertainty about the full impact of Brexit on the U.K.’s financial sector. As Treasury yields in the United States rose lately, the companies in the financial sector, Lloyds included, benefited from the rise. In fact, the rise in the yields is one of the main causes for the positive performance so far in the trading year for the Lloyd share price.