Interactive Investor

Are NatWest shares about to make a multi-year high?

1st August 2022 07:41

Alistair Strang from Trends and Targets

After a big rally on Friday, independent analyst Alistair Strang puts this outperforming high street bank under the microscope. Here's what he thinks could happen next.

NatWest Group (LSE:NWG) achieved our 248p target from three weeks ago, quite literally opting to close the final trading day of July exactly at our target level. As they say in Scotland, "our gobs were smacked!"

It's worth paying a little attention to movements in the preceding week. Monday proved some early interest, the share price closing the session at 230.2p, just 2/10th of a penny above our trigger level, but hey, we'll take it, the scene effectively set for what was coming.

The bank's interim results on Friday thus fell on fertile ground, higher operating profits and a lift in dividend jollying up the party quite nicely. It all proved quite surreal, the share price closing on Thursday at exactly our 230p trigger, then closing on Friday at our 248p target, also achieving a day high of 251.9p.

Perhaps very importantly, NatWest's share price has now closed a session above Blue on the chart, a downtrend which dates back to 2015. Currently, this trend line is sitting around 247.149p, therefore we're allowed to express further optimism due to the market closing the day at 248.6p.

Folk of a fragile nature may with to sit down for the next bit...
Apparently, now above 252p threatens triggering further recovery to an initial 268p. If exceeded, our secondary calculation works out at 281p.

Past performance is not a guide to future performance.

Either one of these target levels "risks" proving quite significant for the longer term, each hopefully capable of permitting the share price to actually close a session above 257p.

From a really big picture perspective, this is liable to prove quite a big deal, doing the unthinkable by elevating a UK retail bank into the realms of three previously unspeakable words - long term hold. All joking aside, closure above 257p allows us to discuss NatWest at 400p without a giggle.
We'd be remiss if we didn't dilute this drooling optimism with some common sense. NatWest needs to slump below Red on the chart (210p) to spoil all the above calculations.

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. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.