Is now the right time to buy Barclays shares?

The Barclays share price, which started the year on a strong footing with higher UK rates in the wings and was up over 15% by mid-January compared to the Financial Times Stock Exchange (FTSE) 100’s 3% rise, has since come crashing back down to earth and given back half of its gains from its post-pandemic low.

The June 2009 to November 2010 lows and the March 2012 high at 213.40p to 219.20p provoked failure in early January with the share price so far slipping to its current April low at 140.10 pence, a near 35% drop from this year’s high.

The bank stock has been caught between the positive effect of higher interest rates on revenues for financial products such as credit cards and loans and the negative impact of rising interest rates on stock prices and risk-off sentiment in view of the ongoing war in Ukraine, the US Federal Reserve’s (Fed) aggressive monetary tightening policy, strict Chinese Covid-19 restrictions and a weak Yuan.

The bank beat expectations Thursday when it reported first quarter (Q1) net profits of £1.4 billion, above analyst expectations of £644 million, according to Refinitiv data. This is nonetheless 18% lower than the (Q1) 2021 result which came in at £1.7 billion.

Strong investment banking performance has been offset by a costly trading error in the US which led to the British bank suspending its share buyback programme for the time being and setting aside a provision of £540 million as a result of the issue.

The bank announced last month that it had sold $15.2 billion more in US structured notes than it was permitted to, which is currently being investigated by US regulators. It had originally expected a hit of £450 million.

The bank’s Global Markets division benefitted from increased market volatility due to the war in Ukraine and by the impact of higher interest rates in the US and UK with profits also driven by the surge in Russian and Ukrainian credit default swaps.

This may contrast with its retail banking arm which has slowed, as has been the case with some of its US peers such as Citigroup , for example.

Is now the right time to buy Barclays shares?

With the share trading and seemingly holding around the 200-week simple moving average (SMA) at 146.40p and it already having retraced half of its gains since March 2020’s pandemic low at 70.30p, now might be a good time to buy it, provided that a tight stop is being used.

The stop loss order would have to be placed below the March and early-April lows at 142.10p to 140.10p, since a daily and especially a weekly chart close below these recent lows wouldn’t bode well for the bulls.

Such a drop may lead to a sell-off taking the share to the 129.50p to 125.10p region which consists of the June 2020 high and January 2021 low and is also where the 61.8% Fibonacci retracement of the 2020-to-2022 advance can be found.

Where the Barclays share price to remain above its recent low at 140.10p and manage to heave itself above last week’s high at 150.90p, however, a gradual recovery towards the December low and mid-March high at 172.30p to 178.10p may ensue with the 200-day simple moving average (SMA) at 179.16p representing a potential upside target as well.

Around the January trough at 184.90p the Barclays share price may struggle again, though.