- Barclays share price has dropped and is about to form a death cross pattern.
- The company announced 5,000 layoffs after publishing its financial results.
- Its investment banking division is facing challenges as FICC revenue drops.
Barclays share price continued its downward trend and is hovering at its lowest level since May 12. It has dropped by over 23% from the year-to-date high, meaning that it is in a local bear market. Worse, the stock is about to form a death cross pattern, suggesting that it has more downside to go.
Barclays Share Price Nears Death Cross
The daily chart shows that the BARC stock price has been in a strong sell-off this year. It has dropped from a high of 538p to the current 411p.
A closer look shows that the stock is about to form a death cross pattern, which happens when the 50-day moving average crosses the 200-day MA when pointing downwards. It normally leads to a prolonged downward trend.
The stock has dropped below the 61.8% Fibonacci Retracement level of 430p, confirming the bearish outlook. Also, it has remained below the Supertrend indicator, while the Average Directional Index (ADX) has jumped to 40. A soaring ADX is usually a sign that the downward trend is gaining momentum.
Therefore, the path of the least resistance for the stock is downwards, with the next key target to watch being at 400p. This price is along the 78.6% Fibonacci Retracement level. A drop below that level will point to more downside, potentially towards 350p.
BARC stock chart | Source: TradingView
Barclays is Facing Challenges in Its Investment Bank
BARC shares have fallen sharply in the past few months as concerns about its investment banking business rose.
Ideally, the year started with a lot of optimism in terms of IPOs and M&A. Such a move would have benefited Barclays, one of the biggest players in the industry.
Recently, however, the situation has changed as high interest rates have slowed dealmaking. The volume of M&A deals announced in the third quarter was down by over 40% from the previous quarter.
The M&A drought will likely continue as long as interest rates are at an elevated level. Also, after the upcoming Anthropic IPO, it is unclear whether there will be other big ones in the foreseeable future.
The company also experienced some challenges in its trading business, with the fixed income, currencies, and commodities (FICC) business dropping by 19%.
Barclays published its financial results this week and said that it will lay off 5,000 employees as it aims to boost its profits. Its results showed that the total income jumped to over 7.35 billion pounds in the third quarter, up by 3%. In contrast, its nine-month income rose by 8% to 23.86 billion pounds.