Barclays consolidates near support ahead of Wednesday’s FY earnings

[MongiIG]

The UK banking giant’s share price remains under pressure ahead of FY results.

Source: Bloomberg

 Axel Rudolph | Market Analyst, London | Publication date: Tuesday 22 February 2022 

The Barclays share price started the year on a strong footing with higher UK rates in the wings, trading at levels last seen in October 2015 and up over 15% by mid-January compared to the FTSE 100’s +3%.

The quasi-uninterrupted day-on-day gains seen in the share price within the first couple of weeks of 2022 stalled at key long-term technical resistance, however, and the Barclay’s share price has since given back all of its early January gains.

It is now trading at -3% year-to-date.

Source: ProRealTime

 

The June 2009 to November 2010 lows and the March 2012 high at 213.4p to 219.20p provoked failure with the share price so far slipping to its current February low at 185.20p.

The bank stock has been caught between the positive effect of higher interest rates on revenues for financial products, such as credit cards and loans, and more recently the negative impact of rising interest rates on stock prices and risk-off sentiment in view of the escalating Russian-Ukraine crises.

The 200-day simple moving average (SMA) at 186.5p has been revisited but has so far held.

Source: ProRealTime

 

Today’s intraday low at 185.2p is a technical level to watch ahead of Barclay’s full-year (FY) earnings, out on Wednesday.

According to Reuters, FY revenue is anticipated to come in at £21.896 billion, slightly up on the previous year’s £21,766 billion and Earnings per Share (EPS) at 34.2, considerably higher than the previous year’s 9.5.

A fall through and daily chart close below today’s 185.2p low would confirm that an Elliott ‘C’ wave to the downside is currently being formed. Wave ‘C’ is often similar in length to wave ‘A’, in this instance the distance from the mid-January high to late January low from 219.6p to 189.2p, or around 30 pence. If the distance of the decline from the 209.4p current February high to the anticipated wave ‘C’ low is indeed going to be similar in length to that of wave ‘A’, the 179p mark would be eyed.

Together with the September and December troughs at 176.3p to 174.3p the latter level represents a target zone for the bears. Minor resistance is seen between yesterday’s high and the 55-day SMA at 195.2p to 196p but short-term downside pressure should persist while the share price remains below its October high at 203.9p.

From a long-term perspective, the 2020-to-2022 uptrend will stay intact while Barclay’s trades above the September 2021 low at 174.3p, however, with the January 2014 and August 2015 high as well as the 200-month SMA at 246.50p to 252.1p providing an upside target zone for the months ahead.