As part of a new initiative to widen the technical analysis brief on DirectorsTalk, we are looking at one of the largest stocks on the London market, as opposed to the usual offering of small caps and growth situations. What can be seen on the daily chart of Royal Dutch Shell (LON:RDSB) currently is the way that interestingly enough, although the stock fell in line with the oil price during September and October, since then the relationship with the underlying commodity has been less direct, and arguably to start 2015 there has been notable outperformance.
What helps the situation from a technical perspective is the way that we have been treated to higher lows since the December floor just below £20, with the backing of a double tested uptrend line in the RSI window currently running towards 45. A further positive from the RSI indicator is the way that this has pushed above neutral 50 to stand at 55, the type of event which is very often a leading indicator on positive price action.
Indeed, we have was effectively a double buy signal in terms of the second higher support for January above £21 as well as the latest end of day close above the top of last month’s downside gap at £22.35. Therefore the suggestion now is that at least while there is no end of day close back below the 50 day moving average at £21.97 we should see shares of Royal Dutch Shell progress towards former September resistance above £25 / an October resistance line projection. The timeframe on such a move is seen as being as soon as the next 4 to 6 weeks and what makes for a reasonably attractive risk reward trade.
