Barclays Share Price Could Drop Before Popping to 170p

Summary:

In this Barclays share price analysis, we look at the next price action to watch in the near term. We explain why it will drop and then rise

Barclays share price has been struggling in the past few days. It has dropped by more than 7% since January 7 and is now trading at the lowest level since January 6. Other UK banks like NatWest, HSBC, and Lloyds are also struggling.

What’s happening: Barclays share price has struggled recently because of the overall weak situation in the UK and the rising risks of negative interest rates. However, Andrew Bailey has warned that such rates would have significant challenges to the UK economy. The inflation numbers released today could mean that rates will remain at the current level. For example, core CPI rose by 1.4% in December while the headline CPI rose by 0.6%.

Meanwhile, US banks have reported relatively strong quarterly numbers. Yesterday, Goldman Sachs said that its revenue soared to more than $11 billion while its profit increased to more than $4 billion. Other banks like JP Morgan and Bank of America also reported strong numbers.

These numbers matter because Barclays has a strong trading business that generates billions of dollars in revenue. As such, it means that the company will likely report strong numbers in February.

Barclays share price forecast

In my last update about Barclays share price, I warned that it could drop further. That has happened, as you can see below. On the daily chart, we see that the stock has formed a bullish flag pattern and is now moving towards its lower side.

It is also on the same level as the 61.8% Fibonacci retracement level. Therefore, I suspect that the pair will continue falling as bears target the lower side of the flag and then bounce back in the next few weeks. If this happens, the price will rise to 170p, which is slightly above the 73.6% retracement level.