What now for star bank stock NatWest?
30th August 2022 07:42
by Alistair Strang from Trends and Targets
After a great August during which the shares hit a multi-year high, NatWest has pulled back. Independent analyst Alistair Strang discusses the possible consequences.
NatWest Group (LSE:NWG) continues to provide a perfect example of a share failing to recover from the financial crash, now trading at 250.9p (25p in real money, once consolidation is factored in).
We’re supposed to be ecstatically gushing about the future, the share price finally scrabbling above the downtrend since 2015. However, we’re a little muted in our hope due to the share price failing to achieve our initial fairly near term “breakout target” at 268p.
- Read about: Free regular investing | Opening a Stocks & Shares ISA | Cashback Offers
Instead, the best achieved was just 264p before the price scared itself with its temerity and fell back a little.
The problem now comes, if the share price opts to close a session below 247p, the level of breakout. Such a movement would now effectively cancel some fairly positive ambitions for the longer term as we can mention – for now – the share is trading in a region with a Big Picture ambition at an initial 336p with secondary, if beaten, a longer term 420p.
It’s all very jolly but we’re worried due to the lack of strength to even reach our 268p ambition. It’s not a case which merits immediate panic, just a horrible feeling of déjà vu as once again, a retail bank lives down to expectations.
Past performance is not a guide to future performance.
Another fear, worthy of comment deals with the reality of the price being “gapped” up above the Blue downtrend. We need to ask what to expect if it’s now gapped down below 247p?
- Why reading charts can help you become a better investor
- Are NatWest shares about to make a multi-year high?
Initially, reversal to 232p looks possible with secondary, if broken, at 222p. But there’s also the very severe risk of the two Gap movements conspiring together, eventually discovering a bottom around 196p.
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.