Interactive Investor

RBS shares: Here's what can trigger a real recovery

The outlook is gloomy, but our chartist thinks the shares could improve if RBS does this.

29th August 2019 09:12

Alistair Strang from Trends and Targets

The outlook is gloomy, but our chartist thinks the shares could improve if RBS does this.

Royal Bank of Scotland (LSE:RBS) 

Increasingly, we warn of a scenario if a price meets and exceeds our initial target ambition. The reasoning is fairly basic.

If a price exceeds an initial target, the secondary becomes exceedingly viable, if not inevitable, eventually. Obviously, spanners are occasionally thrown but it's a good rule of thumb.

On the day RBS (LSE:RBS) hit our 180p (prior report), it actually broke below and bounced (with a remarkable lack of enthusiasm) from 177p.

To us, this was not a comforting sign as it once again suggests RBS intends a bottom at 150p. There is, perhaps, a crumb of comfort showing as the uptrend since 2009 (shown in red) is presently at 168.798p and there's little doubt any near term fall to this level will doubtless exhibit some sort of rebound, if only due to the number of folk capable of drawing a straight line.

We fear they shall be wrong; the attraction of 150p has been evident for some time. Worse, if 150p breaks, the absolute "it must bounce here" point calculates at 134p. Please remember, this is a retail (and political) bank and perfectly capable of playing by illogical rules.

Source: Trends and Targets      Past performance is not a guide to future performance

Of course, perhaps we are being too gloomy in our thoughts and instead, should search for hope amongst this grim collection of numbers.

At present, we shall be watching if the share price exceeds 189p as this is supposed to trigger recovery to 196p.

While fairly useless as a price movement, if 196p is exceeded, it ticks the first box for "bottom is in", giving hope we shall witness stronger movement toward 220p and the land of unicorns, princesses, and golden glitter.

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. 

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.