Interactive Investor

NatWest shares and an overload of optimistic signals

5th January 2022 07:29

Alistair Strang from Trends and Targets

Shares in the high street bank made a great start to 2022, and independent analyst Alistair Strang has found a significant clue as to the future for the share price.

Our regular look at NatWest Group (LSE:NWG) has surprised us a little. The share appears to be starting 2022 in optimistic territory, the price somehow discovering an ability to close 4 January at 234.9p.

By a miniscule 0.6p, the share price has closed at a higher high, since the Blue downtrend was conclusively broken last year. Apparently, it’s now time for party poppers.

While we’re a little “tongue in cheek” with optimism, there is a harsh reality, and it’s that the markets rarely send this sort of signal without it actually proving realistic. Perhaps importantly, the bank share price is also trading above it’s pre-pandemic level and, if experience with other markets worldwide is to be accepted, this should also provide a significant clue as to the future for the share price.

Thanks to this overload of optimistic signals, we’re inclined to take a step back and review the share price potentials from a Big Picture perspective.

Apparently we are now supposed to accept that NatWest's share price has entered a longer-term cycle to an initial 316p. Closure around this level shall prove important, thanks to a perfectly obvious glass ceiling at the 300p level. Our long-term secondary, in the event 316p is exceed – or the price closes above 300p – works out at a visually pleasing 369p, a price level at which we expect some hesitation.

For things to horribly wrong for NatWest, the share price currently needs to reverse below Blue on the chart, presently 207p. Such a movement would quite strongly suggest investing in running shoes but, for now, this particular retail bank provides some hope for the future.

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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