A bullish long-term target for 'trapped' RBS

Royal Bank of Scotland (LSE:RBS)

Quite a lot of stuff is on the brink of doing stuff. Royal Bank of Scotland managed to close 28 May hinting at a coming rise, gold need only better $1,259 (£970) to suggest some near-term action, and Brent moving above $48 will tend to make short positions dodgy.

Of the three, it's almost absurd that RBS shows as attractive - remember, it's a UK retail bank and always poised to let people down.

Of course, perhaps RBS are being kept busy conjuring up billions for Northern Ireland from a magic money tree only banks can harvest?

To dispense with the good news first, always wise with a bank, it appears near-term movement on RBS above 254p should lead to 260p initially, but, realistically, it seems 270p is computing as a viable secondary.

If triggered, the tightest stop appears to be 244p. Though, if we draw red lines, it seems 242p would make more sense.

Frustratingly, the big picture tells a better story as, apparently, we should be regarding RBS as now heading to 370p, needing below 222p (the dashed red line on the chart) to cancel the prospect.

Unfortunately, the immediate price cycle proposes 270p, once again challenging the highs earlier this year, but not bettering them. This results in the situation where we'll not be surprised if the 270p level presents another hindrance to growth.

Regular readers will be aware we regard the retail banks with considerable distain, expecting the worst, and are rarely disappointed.

What, therefore, are our expectations should RBS’s share price slime below 244p? Our initial droop expectation comes in at 239p with secondary calculating at 228p.

Circled on the chart, a recent manipulation gap at 240p, and while our initial drop expectation covers the gap, it also breaks the trend, making 228p painfully viable.

It also will create the visual impression of a share trapped between 228p and 270p.

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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