Interactive Investor

NatWest: ‘if it ain’t going up, it’s going down’

Any true price recovery is going to take some sort of miracle. Our chartist explains why.

1st September 2020 09:38

Alistair Strang from Trends and Targets

Any true price recovery is going to take some sort of miracle. Our chartist explains why.

Natwest Group Plc (LSE:NWG)

As we enter September, it appears, finally, some good news may be coming. 

NatWest's (LSE:NWG) share price has achieved the unthinkable, finally managing to close a session above the downtrend (see inset on chart) of last year. 

That's the end of the good news as, in these pandemic days, we are tending to distrust anything as straightforward as a line on a chart! 

A misplaced comment, an untidy cough, or a Twitter storm seems sufficient to damage logic.

At present, we think NatWest needs to trade above 117.5p to signal a possibility of relief as this works out with an initial target of 124p with secondary, if exceeded, a visually pleasing 135p.

Only with closure above 135p shall we feel justified in believing some true recovery has commenced, perhaps even the first grasp on a cliff face which can take the share price toward the 200p level. 

Unfortunately, when we review the pace of descent in the last year, any true price recovery is going to take some sort of miracle.

If things intend go wrong for NatWest, trades below 109p in the coming week risk ringing alarm bells as reversal to 101p (again) makes a lot of sense. 

Worse still, should 101p break, our secondary is now at 90p, risking taking the share through a trapdoor to around the 50p level eventually. 

In normal times we would be pretty relaxed and promoting the possibility of some recovery, but unfortunately, times are not normal. It is impossible to forget NatWest (formerly RBS) is still flirting with the all- time low price level achieved in March 2009. 

The unpleasant reality generates a reminder of the market truism "if it ain't going up, it's going down”.

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. 

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