Barclays: time for optimism

Our columnist takes a rare positive stance on a UK retail bank – here’s why.

Barclays Plc  

Optimism can spring from funny places. In the case of Barclays (LSE:BARC), we're now officially positive for the share price’s future, thanks to a movement of 4/100ths of a penny!

While the sensible part of the brain is rather firmly in favour of sanity, our software has quite different ideas, now opting to indicate the price has achieved a ‘higher high’ after breaking a downtrend and, frankly, being pretty boring for the last three weeks.

It can be assumed our software is easily impressed, but the surprising thing is that it's rarely wrong with this sort of thing.

Barclays’ breakout closing price high was 189.14p, and the share managed to close the day on Friday at 189.18p. This tiny little change was sufficient to trigger the change shown below, a switch from non-committal black text to exciting blue text, a visual cue something truly unusual happened with a UK retail bank.

Due to previous recovery models, built following movements in both US and German markets, we're actually inclined to take our software's giddy behaviour seriously. We obviously wrote the software, it doesn't have magical powers, but instead employs several hundred formula against which each price movement is measured. 

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Please remember, this is due to a 4/100ths of a penny trigger movement.

So, now we've run out of excuses to delay, optimism now suggests continued recovery above 191p for Barclays, which faces share price movement to an initial 240p.

With closure above 240p our software tells us to expect a longer-term 288p. We do have a little 'sanity clause' suggesting the long-term trade potential can only be marked ‘safe’ once the share price is actually trading above 198p. This formula is one of these 'belt & braces' things, where we attempt to define the point beyond which something becomes inevitable. For it all to go wrong for Barclays the share price must founder below 140p, a concept which is visually unlikely, but in today’s world, who knows?

This certainly shall provide a wide and sane stop loss level for anyone trying a long-term position.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and 'top secret' software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know 'how it worked' with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.