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Barclays share price analysis ahead of earnings

Barclays (LON: BARC) share price pulled back slightly on Tuesday as the market waited for the upcoming quarterly earnings. The shares pulled back to 146.56p, which was slightly below this week’s high of 150p. 

Barclays earnings ahead

Barclays is a leading banking group that operates in about 40 countries worldwide. Its main market is in the UK, where it offers retail and corporate banking. In addition, the company has huge operations in the US, where its services include investment banking and wealth management.

Barclays is more diversified than its other British competitors like Lloyds and NatWest. As a result, the company’s retail and corporate lending business is expected to benefit from the rising interest rates in the UK and other markets.

On the other hand, a sharp deterioration of the investment banking business will likely hurt the company’s earnings. Last week, Goldman Sachs said that its investment banking revenue dropped by 57% in the quarter. 

Morgan Stanley’s revenue in its investment banking segment dropped by over 55%. On the other hand, revenue at more diversified banks like JP Morgan and Bank of America rose during the quarter.

Analysts expect that Barclays total income for Q3 rose to 5.9 billion pounds while its credit impairment rose to over 330 million pounds. In terms of its profitability, analysts expect that its profit after tax dropped to 1.4 billion pounds.

The closely-watched cost-to-income ratio is expected to come in at 64% while the Common equity tier 1 ratio is expected to be 13.8%.

Barclays share price pulled back on Tuesday after HSBC published strong results. Its net interest income rose by a third to $8.6 billion as interest rates rose. The stock dropped sharply because of its management shake-up and warning of the weak sterling.

Barclays share price forecast

Is it safe to buy Barclays shares? The daily chart shows that the Barclays stock price crashed to a low of 132p this month. This was its lowest level since February last year. 

The shares have bounced back recently and are trading at 146p, which was much higher than the important resistance at 138.60p.

They have also dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved slightly below the neutral level of 50.

The stock formed a triple top pattern at around 170.82p. In price action analysis, this pattern is usually a bearish sign. Therefore, the stock will likely pull back to the support at 138.60p after earnings.

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