Is now really the right time to buy RBS shares?

Royal Bank of Scotland (LSE:RBS)

We often complain about the bank from the land of ginger, due to it rarely moving with any real conviction. It was to take some time, but finally Royal Bank of Scotland (RBS) is broadcasting a no-nonsense signal as to its intended direction. It’s so obvious, we decided to pause for thought.

Our problem with this – often ludicrous – share stems from the detail it has managed to outperform a few times during 2018, leading to a suspicion the market is perhaps playing games with investors’ fragile hearts and wallets.

Plus, if it’s about to go up, wouldn’t it be a brilliant wheeze to trigger a bunch of stops, along with some short orders, prior to a rise.

After all, the market is in business to make money, along (at major investment bank levels) with providing employment for politicians seeking a deeper trough.

Perhaps we are giving a hint of distrust, so what is needed to confirm suspicions?

A fairly straightforward scenario looks like, should RBS manage above 272p, we would hope for traffic toward 274.9p.

While in the great scheme of things, this presents an utterly garbage trade, the important argument comes if the share betters 274.9p as it ticks, in pencil, the first box suggesting the price drop lacked integrity. Should 274.9p be exceeded, we can then start thinking of a future at 300p and beyond to 370p.

Maybe we’re being too paranoid, but maybe we’re not being sufficiently paranoid!

Normal rules indicate RBS is heading to a bottom, hopefully, at 240p. And if this level breaks, further travel down to 205p should be expected.

In fact, from our stance, price movements are doing the equivalent of a double page advert in the FT for their future intentions. Closure below red, currently 262p shall be accompanied by the sound of the last straw breaking.

Source: interactive investor      Past performance is not a guide to future performance

Alistair owns shares in Royal Bank of Scotland

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, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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