NatWest’s chart is showing something important
9th August 2021 09:33
by Alistair Strang from Trends and Targets
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Our charts expert has spotted some interesting elements in the bank’s share price movements.
When we last reviewed NatWest Group (LSE:NWG) three weeks ago, we made a point of showing how important it can be to study a share's closing price, in addition to viewing a screen full of pretty candles.
Amazingly, for a UK retail bank, everything started to make sense within days, a target was met, and yet another potential candle catastrophe is upon us.
First, the chart extracts below. The red uptrend since September 2020 was broken in June, the trend break level being at 206.9p. We'd made a point, should the share price manage to close above the level of trend break, we could no longer regard the red uptrend as being viable.
On 3 August, NatWest share price closed the session at 207.4p, suggesting the historical break of the uptrend was no longer valid and instead, price growth was expected. Our initial target of 215p was successfully achieved in Friday 6 August.
Source: Trends and Targets. Past performance is not a guide to future performance
However, staying with our lesson on managing candles - and when to turn them off - it's very possible something more important occurred on Friday, given the point at which NatWest share price closed the session.
Shown below, there's a long-term blue downtrend and with the share price closing at 215.7p, the day was quite solidly above the historical downtrend, ticking a pretty important box, which is the first sign of optimism for the future. The share now needs close a session below 213.6p to give cause for concern.
Source: Trends and Targets. Past performance is not a guide to future performance
Finally, even from a near-term viewpoint, reasonable levels of hope appear possible. Above 216p now calculates with the potential of gains in the direction of an initial 226p with secondary, if exceeded, working out at a very possible 251p. In fact, from a big picture perspective, thanks to the share closing a session above the blue downtrend, we can now regard a long-term 324p as allegedly exerting a distant influence.
If it all intends go horribly wrong, the share price needs close a session below 193p, thus threatening a reversal cycle commencing down to 167p eventually.
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.
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