The argument for a share price rebound at Royal Dutch Shell

After calling the share price slump correctly, this successful analyst updates his targets.

Given it is ‘amateur dramatic week’ for the price of crude oil, a few emails reminded us that it’s worth a glance at Royal Dutch Shell’s (LSE:RDSB) future price potentials. 

When we last reviewed them we provided a scenario for 17 quid or less. Obviously, the share price has fully embraced these potentials, relaxing severely but, curiously, there is an argument for a rebound.

• Have Shell shares just issued a warning sign?
• Is the oil price really heading to $15?
• An outstanding dividend payer going cheap

Recovery anytime soon above 1,493p should prove useful, calculating with an initial price target at 1,567p. Oddly (for us), despite this movement potential being rather trivial in the grand scheme of things, it’s a scenario we’re pretty comfortable with. Things become a bit more vague above 1,567p as our secondary target works out at 1,758p. 

Presently, all the secondary does is give hope for an attempt at the immediate downtrend (blue line on the chart below). Only with price closure above this line dare we express sentiment of “proper” share price recovery commencing as we’re able to give 2,239p as a third level target.

At time of writing, Shell is trading at 1,371p and we’d now be inclined to alarm, if any excuse is found to drill down below 1,243p. Movement such as this is liable to trigger reversal to an initial 1094p with secondary, if broken, down at 834p. Visually, the secondary calculation is absurd but, unfortunately, so was our calculation yesterday which provided a drop target for Brent at 15 dollars.

Sometimes numbers, like politicians salaries, can be absurd. And unlike politicians salaries, they don’t have to be wrong.

Source: Trends and Targets      Past performance is not a guide to future performance

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.