Royal Mail Share Price Ticks Up, But Sentiment Remains Weak

The Royal Mail share price has begun the Wednesday trading session positively, notching up gains of 0.83%. However, the stock remains down for the week following two days of losses. 

The upside performance of the Royal Mail share price remains few and far between as the company continues to groan under the weight of an impending strike which, by the company’s confession, is costing the domestic side of its business one million pounds daily. 

The Royal Mail share price is also battling headwinds from its dismal numbers. Last month, it reported a 51% year-over-year decline in its Q1 2022 revenues as falling COVID-19 test kit post volumes and softer retail trends due to higher inflation upended the company’s financials. As a result, the company’s forward guidance remains guarded. Nevertheless, it expects to break even in the 2023 fiscal year, but only if the threat of a strike action abates. The Communication Workers Union has threatened industrial action over the company’s failure to meet its wage demands. 

There are plans to rename the company to International Distributions Services as part of a move to separate the Royal Mail and GLS brands to allow the GLS component of the company to continue to flourish. In a tale of contrasting fortunes, the GLS component of the company outperformed the Royal Mail brand, posting a 7.8% increase in revenue in the quarter ended 30 June. 

Royal Mail Share Price Forecast

The evolving bullish harami pattern would require an outside day candle to deliver a closing penetration of the 281.7 resistance (23 June and 28 July highs). Once this barrier gives way, the bulls would have a clear pathway to the 294.2 upside target, where the previous highs of 21 and 26 July 2022 are found. 300.0 is the psychological barrier that is next in line (1 June low) before the 310.8 resistance mark formed by the previous high of 7 June 2022 comes into the mix. 

This outlook is negated if there is a failure of the active daily candle that forms the day two candle of the bullish harami fails to breach the 281.7 resistance or if there is a lack of an outside day candle to achieve a closing penetration above that barrier with an appropriate time/price filter. This could lead to a pullback move that targets the 268.2 support level (20 July low). Below this level, the 259.0 price mark supports the price action, being a site where the 22 June daily candle found support. Other pivots become available if the bulls fail to defend 259.0. These are at 250.3 (10 November 2020 low) and the 30 September/15 October 2020 lows at 233.6. There is also the potential for the previous high of 14 November 2019 at 240.0 (psychological support) to form a pitstop area for the bears.

RMG: Daily Chart