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Technical Analysis of RBS

If we only look at the short term, it seems that the market has largely shrugged off the news released on 23rd February 2012 that RBS (Royal Bank of Scotland) has made an annual loss of £2 billion. This is nearly double the £1.1 billion loss the partly nationalised bank made the previous year and the fourth year in a row it has been firmly in the red since the 2008 bailout. From a fundamental point of view there would therefore be many reasons to stay clear of long trades in RBS shares.
Fig. 3.02(a) is a daily chart of RBS for the past two years. From this we can clearly see how the market has punished the shares since 2010, when they reached a high of nearly 60.00, to the current price of well below 30.00.

If we look at the shorter term, however, the picture looks a little different. Fig. 3.02(b) is a daily chart of RBS for the past two months.

This seems to indicate that the shares are currently undergoing a mini bull-run. The price at the start of 2012 dropped to below 20.00 at one stage, but since then they have touched the 30.00 level more than once.
Over the past few days we have seen some weakness, however, with the price currently having dropped below the 10-day Exponential Moving Average.
If it closes well below the 30-day EMA two or three times, it might be time to get out of your long trades and any close below 26.00 could signal that it is time for going short.
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