Barclays stock analysis: Is a long-term reversal possible?

The charts suggest Barclays could start a new long-term uptrend

Barclays reported its third quarter numbers on 21 October, where both the topline and the bottom line beat market expectations, according to the Financial Times. The bank’s revenue of £5.47bn ($7.56bn) was better than analyst average estimates of £5.2bn while net income of £1.45bn surpassed analysts’ expectations of £1.1bn.

Net profits received a boost due to a sharp drop in new loan-loss provisions from £608m in the third quarter last year to £120m. The bank said that unsecured borrowings by credit card customers remain soft and, due to the improved macroeconomic outlook, impairments may be lower than average.

Chief executive officer James E Staleym said: “On top of a good first half, a strong third quarter performance means Barclays has delivered its highest Q3 YTD pre-tax profit on record in 2021, demonstrating the benefits of our diversified business model.” 

Barclays’ advisory and equities business benefited from a surge in global dealmaking and robust capital markets. The investment banking unit reported pre-tax profits of £1.5bn, surpassing estimates of £1.1bn.

Zoe Gillespie, investment manager at Brewin Dolphin, told Reuters: “A record profit for Barclays in the third quarter is illustrative of the turnaround in fortunes the UK’s major banks have had compared to where they were this time last year.” 

According to Yahoo Finance, the consensus analyst share price target for Barclays’ stock is $12.35 (as listed on the New York Stock Exchange). Could Barclays’ stock go up and reach its target objective? Read our Barclays stock analysis to find out. 

Barclays share price technical analysis: weekly chart

Barclays weekly price chart
Barclays weekly price chart. Credit:

Barclays’ share price has reached the long-term downtrend line, which has acted as a strong barrier during previous pullbacks. Therefore, bears will again try to stall the recovery at the downtrend line.

If the price turns down from the current level, the bulls will try to defend the support zone between the psychological level at $10 and the next support at $9.15. If the price rebounds off this zone, the bulls will again try to clear the overhead hurdle.

A breakout and close above the downtrend line will be the first sign of the start of a new uptrend. The stock could first rally to $12.28 and if this level is crossed, the up-move may reach $14.

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This bullish move will invalidate if the price slips and stays below $9.15. Such a move will suggest that traders continue to liquidate their positions on rallies.

Barclays share price technical analysis: daily chart

Barclays share price daily chart
Barclays share price daily chart. Credit:

Barclays’ stock price recently broke and closed above the neckline of the inverse head and shoulders (H&S) pattern. This bullish setup has a minimum pattern target of $12.57.

Usually, after the price breaks out of a bullish setup, the bears try to pull the price down below the breakout level and trap the aggressive bulls. Therefore, a retest of the neckline is possible in the next few days.

If the price rebounds off this level with strength, it will suggest that bulls are accumulating on dips. That will increase the likelihood of the resumption of the uptrend.

Conversely, if the price turns down and breaks below the neckline, it will suggest that the bears aggressively sold at higher levels. The stock could then drop to the right shoulder at $9.66.

Barclays shares: Buy or sell at these levels?

Barclays’ share price analysis shows the formation of an inverse H&S pattern, which has a target objective of $12.57. This positive view could be negated if the price breaks and sustains below the neckline. 

The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial adviser before arriving at a decision. Never invest more than you can afford to lose.

Trade Barclays’ stock: Barclays shares price

Barclays PLC
Daily change
Low: 1.458
High: 1.4695

Further reading: Barclays Q3 profit boosted by investment banking fees

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