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BARCLAYS PLC – The original Northern power house heading South

BARCLAYS PLC (NYSE: BCS / LSE: BARC) is a British multinational bank and financial services company headquartered in London.

It looks like “the original Norther power house” is now turning North as on the price chart it is completing a consolidation pattern in a broader bear trend.

From the historical top at £717 in 2007 the BARC stock price appears to have realized an initial corrective (A) wave and to be now completing a consolidation (B) wave, which appears to take the shape of a contracting triangle. This second wave should logically be followed by a third (C) wave lower to complete the corrective pattern and which should take the stock price significantly lower than the bottom of the (A) wave at £42.69.

The weekly price chart shows the trend (30-week moving average) to be turning lower again, the price being capped below a descending trend line and breaking down from an intermediate support area around £193.4 with a very weak and declining relative strength (compared with the FTSE 350 BANK index) and declining volumes of exchange.

The odds are clearly in favor of the stock price to collapse under its own weight and therefore the recommended action is to sell BARC short.

STRATEGY:
– Sell BARC at the present market price (£191 at the time of posting).
– Stop loss needs to be placed slightly above £210.
– Target the previous low at £120 as a minimum objective and the previous (A) low at £42.7 as an intermediate objective.
– On a break of $42.7 to the downside an extension move to the final objective is expected as it will complete the (C) wave, but its final level will need to be assessed in due time.

Disclosure: I have no position in the stocks mentioned.

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