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.
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, and 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.