The Barclays share price has gained 6.5% over the last two days after testing a major support level. But is this a knee-jerk bounce, or is BARC now a buy?
Barclays plc (LON: BARC) finished Wednesday at 167.20p +5.54p (3.43%).
Ever since failing to break above 190p earlier this year, shares of the British high street and Investment banking giant Barclays have been under pressure.
On Monday, this came to a head when BARC declined to the 200-day moving average at 157.17p.
It prompted me to ask in my report on Tuesday.
“What happens if the Barclays share price breaks this important support level?”
For now, that question remains unanswered because after testing the 200 DMA, the share price has reversed higher.
However, is this a dead-cat bounce that precedes another leg lower or is it possible that we are at the start of a trend reversal that sets the Barclays share rice on a path back to 190p?
Looking at the daily price chart, I see four key areas that warrant attention.
Firstly, 156.00p is a robust horizontal resistance level, linking a series of high points from December 2020 to January. This is obviously reinforced by the 200 DMA, which sits just above at 157.17p. A failure to maintain 156.00p could result in an extension lower to area number two.
The multi-year, 131.04p low in 2019 was tested on the 29th of January this year when the Barclays share price dropped to 130.18p. This was the starting point of a 45%, 6-month rally. Therefore, 130.00p is the next significant support level below 156.00p.
Above the market, the first resistance level is seen between 176.00p and 178.50p, where the 50 and 100 DMA’s are situated. And should the price advance beyond 178.50p, the target is once again the 2021 high of 190.00p.
To summarise, as long as BARC maintains a level above 156.00p, the outlook is favourable. Even more so above 178.50p.
However, below 157.17p, the price is vulnerable down to 130.00p
Follow Elliott on Twitter.
