Barclays’ (LON:BARC) share price has continued to slump since their earnings report revealed weaknesses in their core business and PPI provisions rose.
Now that banks’ earning season is well and truly behind us, a look into key technicals possibly reveal that Barclays’ stock price may soon hit a turning point.
Firstly, let’s consider the 50 and 200 day moving average of the bank’s stock price. The current stock price is below both of these metrics by a considerable margin, suggesting it may be due a rally in the near future as the current price reverts to the mean.
In addition to this, the Relative Strength Index (RSI) of the stock is nearing 30, indicates when a stock is oversold. Barclays’ RSI is currently at 35.
Further to this, Barclays’ share price has just dipped below the 50-day moving average Bollinger Bands, two standard deviations from this mean, and this trend does not usually occur for long.
However, it is also worthy of note that recently, Barclays recently experienced a ‘death cross’. The ‘death cross’ is when its 50 day moving average drops below its 200 day moving average and is a significant bearish indicator.
Whilst the validity of using ‘cross’ signals as a predictor for the future value of stocks has been questioned by some, the logic of comparing longer and shorter term smoothing indicators still stands, and should be considered against other measures of performance.
Adding to the negative picture, Barclays’ have not fared well over the third quarter. The firm saw revenue plummet 30%, as well as seeing net interest margins fall and making a loss per share for the first nine months, suggesting a business that is struggling at its core.
Despite the mixed technical outlook and poor results, analysts are still positive on the share price. HSBC (LON:HSBA) has a target of 240p and Deutsche Bank (ETR:DPW) is targeting 210p.