RBS.L ends the day on a bearish note closing near the low of the day
Royal Bank of Scotland PLC (RBS.L) Technical Analysis Report for Oct 12, 2018 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, RBS.L finished the week -2.2% lower at 244.00 after edging lower £0.20 (-0.08%) today, but still slightly outperforming the FTSE 100 (-0.16%). Today's close at 244.00 marks the lowest recorded closing price since September 3rd. Trading £3.40 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (RBS.L as at Oct 12, 2018):
Friday's trading range has been £5.60 (2.28%), that's above the last trading month's daily average range of £4.71. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for RBS.L.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. The last time this happened on September 12th, RBS.L actually gained 1.06% on the following trading day. Additionally, one bullish candlestick pattern matches today's price action, the Last Engulfing Bottom Pattern.
Prices are trading close to the key technical support level at 243.50 (S1). After spiking up to 249.50 during the day, RBS found resistance at the 50-day moving average at 248.40. The market was bought again around 243.90 after having seen lows at 244.00, 243.60 and 243.50 in the last three trading sessions. Obviously there is something going on at that level.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the close-by swing low at 243.50 where further sell stops might get activated. With prices trading close to this year's low at 238.40, downside momentum could speed up should the stock break out to new lows for the year. Further selling might move prices lower should the market test September's nearby low at 241.10.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Bottom Pattern" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for RBS. Out of 81 times, RBS.L closed lower 56.79% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 51.85% with an average market move of -0.45%.