Banking on Barclays

FROM zero to hero, the UK banking sector has seen astonishing rises in the last six months. Having begun the year as Footsie laggards, banks are now outpacing just about all other share sectors.

And with commentators predicting more gains ahead, investors are eyeing Thursday with optimism as Barclays release their third-quarter earning figures. According to the charts, it looks like popular consensus will win the day.

Rocketing from summer lows of just 440p, Barclays shares have traded on a strong uptrend ever since. And the latest short-term trend has carried prices from an already solid 540p to their current impressive price of 570p.

The share price has risen by over 85% from its March 2003 closing low at 310p and by over 30% since July 2004. In the past three weeks, Barclays has rapidly moved higher by over 8% on an absolute basis, as well as outperforming the FTSE 100 Index on a relative basis since mid-July.

Now trading steadily ahead of results, shares are nudging intra-day October highs at 586p. So what next? A break above 586p will catapult Barclay's to the psychological 600p resistance zone. And once penetrated, on to the all-time high of 632p, last seen in April 2002.

A word of caution though, poor figures will push shares back through the short-term support trend at 570p and devalue Barclays to October's low point at 521p. Look out for any 'early-warning' price move on Wednesday for signs of weakness. If shares break down through 565p pre-results, there'll be likely losses ahead.