Why this analyst is bearish about RBS shares
31st October 2018 08:40
by Alistair Strang from Trends and Targets
Share on
Profit might be up, but RBS shares recently took a tumble after missing a key target. Chartist Alistair Strang runs all the important numbers to identify where this is heading.
Royal Bank of Scotland (LSE:RBS)
Our last review in August against The Royal Bank of Scotland Group proposed a drop target initially at 231p. Secondary, when broken, came in at 220p. It was to take nearly two months of excruciatingly sluggish moves until the target was achieved. To our surprise, the share has actually bounced from our 220p!
We've a bit of a problem with this rebound, the share requiring any movements now to exceed 235p to trigger some recovery to an initial 242p. The key element shall come if 242p is bettered as this justifies ongoing recovery toward an important 248p.
At present, achieving 248p will serve to recover the price above the uptrend since The Brexit Vote, and again into the realms of illusory safety.
As always, we have doubts.
It's important we acknowledge our drop target at 220p was not actually broken, this perhaps arithmetically presenting an approach to 242p as possible.
But, unfortunately, the bigger picture remains warning of weakness below 220p generating travel down to 212p initially with secondary, if broken, at a "must bounce" level of 204p.
Of course, there can never be a certainty that any bounce shall prove long lived, thanks to any fraction below 204p signalling 187p and below for the future.
In summary, while the share is indeed exhibiting a bounce, we've considerable doubts thanks to the attention paid to the red Brexit uptrend. Essentially, we still suspect 204p shall make an appearance 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.
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.