Interactive Investor

FTSE 100, NatWest and the price of gold 

20th September 2021 07:46

Alistair Strang from Trends and Targets


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Independent analyst Alistair Strang gives his view on three high profile trades.

Our Friday report here for the FTSE 100 proved quite prescient. Our criteria provided a secondary target at 6,949 points. The market bottomed at 6,941 points. In addition, we’d been a touch hysterical regarding the dangers of an opening-second spike. An initial 7,096 calculated as possible, the best the market attained being 7,092 points in an opening spike!

As expected, the index toddled off, thereafter, in the opposite direction. It almost felt like we’d written the script for the day. Now, London needs to actually close a session above 7,022 to firmly suggest the ninth uptrend break in 11 months isn’t genuine. 

There are some slight hints it may not be, so we shall be interested if the FTSE staggers above 6,994 points on Monday. If so, there’s a pretty fair chance the market may exhibit some surprise gains.

Basking in this ointment is NatWest Group (LSE:NWG), the share price fluttering around like a fly on steroids. The share has a blue line, a downtrend since 2007 (arguably, thanks to consolidation) and price movements since August tend confirm the market is paying attention to this trendline. 

The inset on the chart below shows, aside from a brief break of the blue line last week, the market has tended respect the trend and as a result, we’re apparently allowed to hope for gains, rather than a further thumping for the beleaguered share price. 

Generally, when the market promptly corrects a retreat below a trend, some optimism is suggested. The immediate situation appears quite straightforward, as strength above 217p should now provoke a gain to an initial 225p with secondary, if bettered, at a longer term 251p.

Conventional “rules of engagement” suggest above 225p should prove significant for the longer term, taking the share price into territory conventionally described as happy. Perhaps this shall prove the case, if we could only forget about Brexit and Covid-19.

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

Gold is behaving a bit oddly, obviously capable of giving the mining sector a bit of a hammering if our fears play out. Mining sector shares rarely flourish when the price of gold melts down. 

At present, below $1,739 should provide early warning of potential trouble. This risks triggering reversal to an initial $1,720 and hopefully a proper rebound. The greater danger appears should $1,720 break, as this risks ongoing drilling down toward $1,623.

Such a calamity allows a further calculation, should $1,623 break, with ongoing excavation to an eventual bottom of $1,450.
At present, the value requires above $1,837 to create a scenario for future gains, given an initial potential at $1,862 with secondary, if bettered,  at $1,950 dollars. 

Such frivolity would place the metal in sight of a future $2,079 high, should everything become flamboyant!

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. 

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.

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