Why RBS needs a miracle to escape the downtrend

The Royal Bank of Scotland (LSE:RBS)

Unlike Barclays (BARC) or Lloyds Bank (LLOY), we find ourselves unable to draw a nice neat trend line from “the day it all went wrong”. Essentially, in 2008, Royal Bank of Scotland (RBS) needed a little manipulation to continue the forced reversals, so this spoiled the trend.

As is our won’t, we’ve drawn a blue line on the chart which dates back to September 2008, this being the first (and last) high point which followed the shares manipulation downward in May 2008, an event which created a sodding great gap between 3,190p and 2,665p due to historical prices adjusted to cope with the AIM inspired 10:1 split during 2012.

Unsurprisingly, there are a few indications the market is taking the blue line quite seriously and this creates the situation where RBS currently needs close a session above 281.966p to suggest it has joined the other two retail banks in escaping the ruling downtrend.

Unfortunately, the share appears to have taken advertising space in “Clown Shares Monthly” to boast it intends head to 259p with secondary if (when) broken, at an eventual bottom of 244p or so.

The price needs a bit of a miracle and, while 281.966 isn’t terribly far from current, we’d be inclined to take anything near term above 276p as a signal bottom is actually “in” (for now) and plan for some coming growth toward 281p and a challenge of the ruling downtrend.

In the event the price somehow managed to close above the trend, apparently an initial 297p makes for a viable ambition. Secondary, with closure above, apparently should be 350p.

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.

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