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NatWest’s share price has started to decline after reaching a 2021 high of 222.30p last week, which may raise concerns for investors. By the close of trading yesterday, the shares had dropped nearly 4% since Friday and have fallen on three out of the last four days. Despite this recent weakness, NatWest is still up 15% since July 20.
NatWest Group Plc (LSE: NWG) saw a strong performance following its first-half earnings release at the end of July. The British bank exceeded analysts’ expectations, reporting a pre-tax profit of £2.5 billion for the six months leading up to June. Additionally, NatWest increased its shareholder payout target by £200 million, bringing it to £1 billion for the year.
This positive news helped the share price easily break through the psychological barrier of 200p, reaching 222.30p, an 18-month high. However, over the past week, the stock has struggled to move higher and has started to decline. This could either be a temporary pause in the rally or the beginning of a more significant correction.
On the daily chart, there’s a clear support level at 214.00p, which was previously a significant resistance level and now serves as the first line of support. If NatWest’s share price falls below 214.00p, the next key levels to watch are the 50-day moving average at 205.50p, the 100-day moving average at 202.00p, and the critical £2.00 mark.
If the price drops below the 200p threshold, it could be vulnerable to a further decline, with trend support around 189.00p. However, for now, the share price remains in a strong uptrend and above significant support levels, keeping the overall trend positive.
Although the price has pulled back, NatWest’s strong fundamentals may attract buyers during dips. Therefore, I expect any sharp decline to be short-lived, presenting an opportunity for investors to purchase the stock at a lower price. This positive outlook holds as long as the share price stays above 200.00p. A close below this level, however, would invalidate the bullish view and could indicate the potential for more significant losses.