Barclays shares: how to avoid some big traps

Our chartist explains why he's suspecting the worst while hoping for the best with Barclays shares.

Barclays (LSE:BARC) 

Barclays (LSE:BARC) are presently giving a sufficient excuse for us to explain a reason for market paranoia.

What we're seeing is the exact opposite of what's usually a reason for optimism, when a price reacts to a downtrend from afar.

This seductive dance is something we often suspect is designed to panic traders, convincing them a share isn't about to go up.

Barclays' neat trick is doing the converse, the price spending the last four sessions floating just above the immediate uptrend.

Anyone drawing an uptrend since the March Covid-19 low will quickly note the share hasn't broken the uptrend and, visually, hopefully it shall not.

In fact, some folk will convince themselves this makes a safe entry point and, thus, convince themselves it is safe to enter a position which may be a trap!

Like all traps, the trigger movement is liable to be fast and painful.
 
The situation immediately now threatens weakness below 109p leading to an initial 104p with secondary, if broken, calculating at 94p and hopefully a solid bounce.

The great danger comes should 94p break, whether due to news flow or world events. In such a scenario, the price could easily accelerate downhill toward 71p and hopefully a proper bottom.
 
Of course, there's the obvious risk we're focusing on reversal potentials, simply due to the feeling of gloom inflicted on everyone by the pandemic.

Thankfully, the share price does not require much work to suggest some optimism may be possible.

There's a fairly useless immediate potential, where movements above 116p are supposed to propel Barclays toward 120.5p. Should the 120.5p be exceeded, a small box gets ticked which gives the first signal a bounce may be genuine.

Above 120.5p should trigger further recovery toward an initial 128p with secondary, if exceeded, at 132p along with a very probable glass ceiling, given this matches the level of previous highs. Only with closure above 132p dare we believe a miracle toward 154p and beyond is coming.

For the moment, Barclays' share price is in the "crossed fingers" zone where we suspect the worst while hoping for the best.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.