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Barclays (BARC) Rejection At 100-Day SMA Opens The Way For Lower Levels

ftse 100

Barclays is under severe selling pressure today after the stock price rejected the previous week at the 100-day moving average. Barclays reported a 19.6% rise in total income to 6.3 billion, the profit before tax for the first quarter came 38.4% lower at 913 million.

The bank’s earnings boosted by higher trading earnings as that sector benefited by high volatility due to the coronavirus crisis. But the core banking business after the recent interest rates cut from the BOE would lower the profit margins. The net interest margin will also be pressured. That will significantly reduce the profitability of the loans sector.

The recent increase in lending the last months due to coronavirus crisis can’t continue throughout the year, while I expect an increase in bad loans as many companies will close their operations and many clients will lose their jobs.

Barclays has suspended the divided for the rest of the year as per the Bank of England decision.

Barclays will release the next quarterly earnings announcement on Wednesday, July 29th, 2020. The company hasn’t provided any guidance.

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Barclays Daily Technical Analysis

Barclays is 2.45% lower at 114.10, making fresh weekly lows. The bank managed to run an impressive rebound from the March lows and now is 60% higher since the March lows. The technical outlook for Barclays is bearish for the long term, and only a move above the 100-day SMA might initiate another leg higher. 

On the downside, first support for Barclays share is at 112.50 the daily low. In case of a break lower then the next support stands at 107.65 the 50-day moving average. Next support zone stands at 99.16 the low from May 18.  

On the upside, initial resistance will be met at 117.90 the daily top. The next hurdle for the share to the upside stands at 119.71 the 100-day moving average. Bulls will be in control above 119.71 targeting 124.52 the high from June 17.