Lloyd share price: Avoid as a rare death cross pattern nears

Lloyds (LON: LLOY) share price has retreated in the past few weeks as concerns about the company continue. The stock dropped to a low of 44.82p, which is about 10% below the highest level in May, meaning it has moved into a correction phase.

UK inflation and Bank of England decision

Lloyds and other UK banks will be in the spotlight this week for two main reasons. First, the UK will publish the latest consumer inflation data on Wednesday. Economists believe that the country’s inflation continued dropping in May.

Precisely, economists expect the data to show that the headline consumer inflation dropped to 8.5% in May while core CPI fell to 6.8%. These numbers are important because the country’s inflation has an impact on the Bank of England (BoE).

The other important bank and finance news will be the upcoming interest rate decision by the Bank of England (BoE). Economists believe that the bank will decide to hike interest rates by another 0.25% on Thursday.

Banks like Lloyds, NatWest, and Barclays make more money when interest rates are rising and defaults are low. They also do well when the unemployment rate is low. Data published last week showed that the country’s unemployment rate remained low in May.

Still, there is one reason why I don’t recommend buying Lloyds shares. Historically, the stock has underperformed the market. For example, the stock has dropped by 14.50% in the past five years. In the same period, the FTSE 100 index has been flat while the SPDR Bank ETF (KBE) ETF has dropped by about 10%.

Past performance is not always an indication of what will happen in the future. However, there is no real catalyst that will lead to strong performance in the future. 

Lloyds share price forecast

LLOY chart by TradingView

The daily chart shows that the LLOY stock price has been in a strong bearish trend in the past few months. It has dropped below the 50% Fibonacci Retracement level. Most importantly, the stock is about to form a death cross, which happens when the 50-day and 200-day moving averages crossover.

Therefore, there is a likelihood that the shares will continue falling as sellers target the next key support level at 40p. This price is at the 78.6% retracement level and is about 9.12% below the current level.