Barclays stock analysis: will price react to strong results?
Barclays’ strong pre-tax profit could challenge the 52-week high of £1.899 achieved in April
Contents
- Barclays share price technical analysis: weekly chart
- Barclays share price technical analysis: daily chart
- Barclays stock: buy or sell at these levels
- Trade Barclays stock: Barclays shares price
Barclays reported a pre-tax profit of £5bn ($7bn) in the first half of 2021 – nearly a four-fold increase over the £1.3bn made in the first half of the previous year.
The strong results benefited from increased equity trading during the pandemic, surging investment banking fees from advising on deals, and the release of £742m in reserves set aside last year for bad debt charges.
The bank’s chief executive, Jes Staley, said: “We are starting to see the resurgence of activity across our businesses, with Group income up on the same period last year when excluding the impact of FX movements.”
Staley painted a bullish picture for the second half of the year: “Our CIB business is well positioned to benefit from continued growth in debt and equity capital markets, with Global Markets and Investment Banking fees income up 36% since 2019.
“Our strong retail businesses are poised to support and benefit from a consumer recovery.” On the speculation about succession, Staley said he plans to stay for “a couple more years”.
Barclays said it will payout an interim dividend of 2p per share and spend £500m to buyback its shares.
John Moore, senior investment manager at Brewin Dolphin, told Reuters: “Barclays undertaking a further share buyback and upping its half-year dividend marks another step on the road to recovery for the UK’s major banks and financial sector, at large, from the dark days of dividend suspensions.”
Could the resurging economy boost investor interest in bank stocks? Will Barclays stock go up? Read our BARC stock analysis to find out.
Barclays share price technical analysis: weekly chart
The Barclays stock price has been trading inside a large falling wedge pattern for the past few years. The bulls will now try to push the price to the resistance line of the wedge.
This level has acted as a strong resistance previously, hence the bears will again try to defend it aggressively. If the price turns down from this resistance, the stock could extend its stay inside the wedge for a few more weeks.
On the other hand, if bulls drive and sustain the price above the wedge, it will suggest the start of a new uptrend. The stock could rally to £3.60 and then make a dash towards the pattern target of £4.30 ($6).
Generally, when the price breaks out of a long-term pattern, it tends to surprise on the upside.
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Barclays share price technical analysis: daily chart
The Barclays’ stock price rallied sharply from the 21 September intra-day low of £0.8885 to an intra-day high of £1.899 on 29 April, a 113% rally in just over seven months.
Repeated attempts by the bulls to push the price above £1.90 failed in March and April. This attracted profit-booking by traders and the stock has been gradually declining inside a descending channel for the past few days.
However, the positive sign is that bulls have not allowed the price to dip and stay below the 50% Fibonacci retracement level of £1.599. This indicates accumulation at lower levels.
The sharp bounce off the support line of the channel from 20 July has reached the downtrend line. The long wick on the 28 July candlestick suggests that bears are likely to mount a stiff resistance.
But bulls did not give up much ground and have again pushed the price back to the downtrend line today. This indicates that bulls are buying on every minor dip.
The 20-day exponential moving average (EMA) has started to turn up and the relative strength index has risen into the positive territory, indicating the path of least resistance is to the upside.
If buyers thrust the price above the downtrend line, the stock could challenge the overhead resistance at £1.899. A breakout and close above this level will signal the resumption of the uptrend.
The stock could then start its journey to £2.1685 and later to £2.40. This bullish view will invalidate if the price turns down from the current level and breaks below the support line of the channel.
Barclays stock: buy or sell at these levels
The Barclays share price analysis suggests that buyers are attempting to make a strong comeback.
If they can push and sustain the price above the downtrend line, the stock could retest the 52-week high at £1.899. A breakout of this resistance could signal the resumption of the uptrend.
This bullish view will invalidate in the short term if bears sink and sustain the price below the 20-day exponential moving average (EMA) for three days.
