Barclays 5% Higher on the Day and Approaching Key Resistance Level

Summary:

Barclays shares were up 5% on Tuesday and the stock is approaching a key price level that capped gains in August and October.

Barclays shares were up 5% on Tuesday and the stock is approaching a key price level that capped gains in August and October. The company is still seeing a boost from the third-quarter earnings release.

The bank saw provisions for bad loans at £608 million, which was down 63% from Q2 and much lower than the analyst expectations of £1 billion. Income was also 6% higher than the previous quarter and the bank’s capital ratio was also higher at 14.6% compared to the forecast 14%. The earnings gave traders hope that the stock has seen a long-term low. This expectation was dented by the risk of further lockdowns in the U.K. but news today sees the country’s “R” rate lower

Barclays canceled its dividend at the beginning of the virus fallout but the company said they would review it at year-end. There has been some talk of a vaccine by December and this could see the stock boosted with a dividend in early-2021. Investment banking has been a big driver of profits this year and in the recent Q3 release the markets division was 29% higher year-on-year at £1.69 billion.

Barclays U.S.-listed stock was also the recipient of the large call option buying last week with 3,795 call options purchased on the stock. This was an increase of over 300% compared to the usual volume of 800 call options.

Barclays Technical Outlook

Barclays is approaching the key resistance level at 112.88 which capped prices in August and October. If Barclays shares can close above that level then a further rally is possible to the 120.00 level and maybe the 132.00 highs from June.