Royal Mail share price was in the green yesterday after finding support above a fiver. But for RMG to deliver serious profits, it must scale the 100 DMA.
Royal Mail Group plc(LON: RMG) recovered all of Wednesday’s losses yesterday after bouncing from key trend line support.
RMG closed out Thursday’s trading at 532.40p, higher by 16.20p (3.14%). Positive trading days have been few and far between for Royal Mail Group in July. Yesterday’s green candle is only the third this month. Furthermore, coming into Thursday, RMG had declined almost 17% from June’s all-time high price of 613.80p.
However, the multinational postage and courier company is still showing a healthy 51% return in 2021 and has increased almost 350% from last year’s low point.
The recent weakness follows Royal Mail’s Quarterly results, which revealed revenue growth of 16.59% YoY, which improved net income by 285.09%, from £161.00m to £620.00m over the same period.
This apparently was not enough for investors who remain concerned about the firm’s second-half prospects as UK shoppers return to the high street.
RMG Technical Outlook
The daily chart highlights a strong rising trend channel the Royal Mail share price has respected since March 2020. However, RMG is currently around the mid-point of this rising wedge pattern. Therefore, neither the support nor resistance lines are relevant at the moment.
However, a more concise wedge has materialised over the last 3 months. The top-end is visible at 573.40p, and along with the 50-day moving average at 569.30p, offers resistance.
The supporting lower trend line is seen at 518.00p and was briefly pierced on Wednesday, before the subsequent recovery. This is an obvious first support level, and if RMG slides below, the next target is not seen until the 200 DMA at 436.30p.
Furthermore, on Tuesday and Wednesday, the price was rejected at the 100 DMA 534.7p. This failed retest suggests selling overhanging the price. And unless RMG closes the week above 534.70p, it remains vulnerable to another look at the 518.00p support.
Therefore, today’s close could be pivotal in determining a Royal Mail share price prediction next week.