Brexit always promised to be a long drawn out affair. Chances are it will be missing in action as an influencer of day to day market moves for much of the coming months and years. However, it lurks in the background as a potential risk factor and the more it is discounted the greater its potential to cause volatility.   

This chart might help gauge the pulse on longer term market sentiment and the extent to which Brexit risk is being over looked. Barclays is one of the UK banks with the biggest Brexit exposures. Analysts believe loss of “passport rights” into Europe will knock its profits. It also has a significant exposure to investment banking that will require it to substantially increase overheads in Frankfurt or Dublin if it is to keep trading European securities and servicing European corporates.

Earlier this week, the share price hit the bottom end of a resistance zone in the form of its 200 day (40 week) moving average. That represented a rally of more than 40% off the immediate post Brexit low. This is partly about correcting an over shoot in the immediate aftermath of Brexit. It also reflects pleasing resilience in the UK economy since the vote.

However, a return to the top end of this resistance range would put Barclays right back at its pre Brexit level. That looks a stretch given the risks that still exist.