Shares in this high street bank have already rallied hard, but our columnist has spotted a new break-out level.
NatWest Group Plc
Since May 2007, NatWest Group (LSE:NWG) has allegedly had a downtrend, one we're showing in blue on the chart below. Unfortunately, the integrity of this blue line is in considerable doubt, due to the share price experiencing a 10:1 consolidation in 2012.
NatWest has changed its name from Royal Bank of Scotland (RBS), and managed to utterly confuse historical share movements when merging RBS data into the new name, along with the artificially changed value of individual shares.
This blue downtrend is thankfully verified by price movements in both 2015 and 2019, suggesting NatWest now only need exceed a current 218.964p (roughly) to start trading above the historical downtrend and start promising great things for the future.
What surprises us, greatly, about this supposed break-out level is that the price required is virtually identical to the share price for NatWest when the pandemic started to take hold in February 2020.
With NatWest presently trading around 208p, the share price certainly does not need to extend itself far to drift into territory where optimism for the longer term becomes possible.
We should point out something which makes a lot of sense. It will probably experience some hesitation around the 220p level, both due to the proximity of the blue downtrend and the prior pre-pandemic high.
- Here's how NatWest profits rocketed in Q1
- UK retail banks start to outshine their European rivals
- Why reading charts can help you become a better investor
However, in the event the share manages to close above the blue line, we're able to calculate the potential of recovery toward an initial longer-term 252p with secondary, if bettered, working out at 308p.
Anything above the 308p level means we take a hard look at the tea leaves again, due to this moving the share price into a region where some extraordinary gains become very possible.
Due to this being a UK share, and, worse, a UK retail bank, it's essential we glance at possible downsides.
At present, the price needs to move below 184p to indicate issues ahead, risking reversal to an initial 168p with secondary, if broken, at 132p. We really dislike the idea of such a secondary, given it provides a ‘lower low’ and promises a future with the share price stuck in the doldrums.
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.