Barclays share price (BARC) is down by more than 1.25%, underperforming the FTSE 100, which is down by 0.48%. Other banking shares in London are also in the red, with Standard Chartered, HSBC, and Lloyds share price falling by 2.40%, 0.67%, and 1.30%, respectively.
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Barclays share price has been under pressure this year. It has dropped by more than 45% this year, underperforming the iShares US Financials ETF that tracks the biggest financial companies in the United States. However, BARC has done better than some of its biggest competitors in the UK. For example, Lloyds share price has fallen by 60% this year while HSBC has dropped by more than 47%. Standard Chartered has dropped by almost 50%.
There are several reasons why Barclays has outperformed its British peers. First, unlike banks like NatWest and Lloyds, Barclays is a relatively diversified bank. While the bank makes most of its income from consumer and business lending, its fastest-growing segment is in investment banking. Indeed, the company has set aside close to £4.9 billion in provisions for bad debts this year.
It allocated £1.6 billion to these provisions in the previous quarter. However, in the same quarter, its trading revenue rose by more than 60%. The markets division rose by 49%, which helped offset losses from other business segments.
Second, unlike a bank like Lloyds, Barclays is highly diversified from where it operates. The bank has operations in the United States and other countries, where it has a substantial market share. As such, this diversification has helped it limit its exposure to one market such as the UK.
So, is Barclays shares a buy? Analysts have mixed opinion about Barclays share price. This month, analysts at UBS said that they expect the shares will climb to 140p, which is substantially higher than the current price of 105p. At the same time, analysts at JP Morgan expect the shares will climb to 160p while those at Jefferies are more optimistic as they see the shares doubling to 233p. On average, these analysts have a target price of about 153p.
Analysts are optimistic about Barclays
Barclays share price forecast
The daily chart below shows that Barclays share price has been moving lower in the past few days. It is below the ascending trendline that is shown in blue. It is also below the 50-day and 100-day exponential moving averages and is slightly above the 23.6% Fibonacci retracement level.
Therefore, the path of least resistance, in the near term, is lower as bears target the next support at 98.50p. On the flip side, a move above 110p will invalidate this trend since this price is above the 100-day EMA.