RBS nears breakout zone

Royal Bank of Scotland

Using the last three days of the month for an update against the retail banks fell apart with the discovery that February only has 28 days... This is not heralding a new tradition of starting months with a look at the banks.

Unusually, a decision was made to watch Pres. Trump's speech to the US parliament as it's been clear this week the markets were awaiting "something".

Guess what, "something" seems to have happened as the markets appear to be breaking free of their recent slumber. It's quite odd, while Pres. Trump seemed to come across as rather more measured than during his adversarial debates, the content of his speech has been broadly forgotten while his delivery approach seemed similar to sending a Tweet.

He'd strongly present something, then hesitate to check it hadn't exceeded some sort of mental 140 character limit. It reminded of Mrs Thatcher's 8 second rule when she was making a point. It's fair to ask what has this has to do with Royal Bank of Scotland?

We watched closely movements against RBS on the Dow Jones during the evening session in the hope of it exaggerating its movements on the FTSE during the Wednesday but, unfortunately, once London went to the pub at 4:30pm, the evil US clone did absolutely nothing interesting.

However, we've some hope from its session in the UK as there's an interesting small potential showing, hopefully capable of 'proving' the price has bottomed.

Near-term, above just 245.8p is supposed to provoke growth toward 249.4p. And if 249.4p is bettered, the first box of a "bottom being in" can be ticked as movement toward 264p can be anticipated.

At this point, a glance at the chart is required as we've painted a glass ceiling at 260p. RBS now needs closure above 260p to make some growth about as inevitable as possible as we'd hope for movement toward 277p initially with secondary, if bettered, at 321p and a bonk against the long-term downtrend since 2008.

Of course, when discussing RBS, we always imagine a bank with a corporate logo wearing a clown costume!

The share price recently described a GapUp GapDown dance and this introduced the potential of weakness near-term toward 222p - if the usual GaGa rules continue to be applied.

Unfortunately, the share price needs better than 249.4p to utterly cancel the GaGa calculation. Should RBS attain 222p, we'd expect another bounce anyway.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. 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.

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.