NatWest: time for a surprise recovery?

The retail bank could be due a strong recovery - but the question is when.

NatWest Group (LSE:NWG) managed a miracle surge above our 201p trigger, utterly failing to achieve our 212p target. Instead, it fizzed out at just 208p with the news that the Indian Covid strain was now on our shores. 

In normal circumstances, the series of price movements would create about the closest thing to a 'sure thing' trade as it’s possible to get. Apparently, for NatWest we can now report above 212p should enter a recovery cycle to an initial 250p, a confident and sane looking recovery target.

In fact, we can even tighten this now to above 210p, allegedly being capable of triggering a series of remorseless drives upward. We even can calculate a longer-term secondary at 306p, something we’re less confident on despite the big picture visuals.

There is something fairly encouraging revealed by recent price moves. We previously moaned that the share needed to move below 183p to undo any growth trigger. Thus far, the lowest point achieved since the trend break upward has been 184.75p, frighteningly close to cancelling recovery potentials but failing to cancel the scenario.

As the inset on the chart reveals, this lunge downward came immediately following the previous lunge upward, signalling the market is perfectly aware of both the blue and red trend lines. 

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Traditionally, our inclination is to go with any initial trend break as setting the tone for the future. Thus, the movement to 208p may well prove a viable early warning for a share which intends surprise recovery toward 250p. 

We’re hopefully not being gullible, but the picture shown does lend itself to suggesting NatWest is about to make a surprise recovery surge upward.

Goodness knows when! For everything to go wrong, the bank's share price needs now sink below 175p. This would be a poor show, threatening a reversal cycle to a bottom, hopefully, at 141p.

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.