Time for Barclays to break out of the doldrums?

The banking group’s share price has been static, but that could be about to change.

Barclays

It's been three weeks since we last reviewed Barclays (LSE: BARC), and nothing has happened.

But is that about to change?

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This week, Goldman Sachs (NYSE:GS) is due to announce earnings for 2020. Following JP Morgan’s (NYSE:JPM) numbers recently, analysts are getting fairly bullish about Goldman. We'd hope this shall herald the start of an earnings season where even the retail banks may experience some relief from their recent dismal performance.

For instance, last month we provided criteria for Barclays giving an important target level of 161p. Unfortunately, the best achieved in the last three weeks has been a worrying 158p, making us suspect some weakness may be present.

Ideally, the share price needs to better 161p to give any real hope for the longer term, due to fairly realistic growth becoming difficult to avoid. Closure above 161p makes travel to an initial 189p very possible, with secondary calculating at a more encouraging longer-term 228p.

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As always, there's a fly in the ointment thanks to the blue downtrend on the chart. That line which dates back to the simpler days of 2013 when we were all trying to forget the banking crash a few years earlier.

Perhaps some folk will regard it as important, perhaps not. In current market conditions, conventional trend lines seem to lack importance. In any case, Barclays ended 2020 by breaking free from a bigger picture downtrend, one which dates back to 2007. Given price movements, it certainly appears the market was perfectly aware of this almost invisible trend line (see inset on chart).

The immediate situation is fairly benign, the price needing to move below 146p to suggest coming weakness to 141p. Only below 141p do things risk being problematic, as it would indicate the break from the trend has failed, risking the share again being trapped at the back of a cupboard with a secondary target level of 126p.

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.