RDSA has performed well over the last two weeks, gaining more than 10% since the 26th of July. Much of the recent rally came on the back of impressive second-quarter earnings, which lead to the announcement of a $2 billion share buyback programme.
The rise is even more impressive considering the performance of Brent crude over the same period. In the last two weeks, the benchmark oil contract is down close to 9%. And indications are that the slide may continue.
Should that prove true, the Shell share price may struggle to maintain the positive momentum.
RDSA price forecast
The daily chart shows Shell is trading in a wide band of resistance between 1,410p and 1,590p. More recently, the price has run into supply at 1,475p. This marked the high in July, and the subsequent reversal sent the price down to 1,296p, where it found support at the 200-day moving average.
This should be considered the first important resistance level. If the price can clear 1,475p, the 1,5000p big figure should be easily surmountable.
Although, on Friday, shell finished the week at 1,467p, just below the key resistance. And therefore, this weeks trading will dictate if the Shell share price is breaking out or reversing lower from the significant resistance.
The positive price action has lifted Shell far above the first major support. Whilst this is encouraging for the bulls, it does leave the price vulnerable to a substantial drop if sentiment turns negative.
Should that happen, RDSA support is seen at the 28th of July high of 1,386.p. Furthermore, the 50-day moving average at 1,393.60p reinforces the support just below the 1,400p big figure.
For now, the outlook is still positive. Although, investors should monitor the crude price action for cues to where the Shell share price is heading next.
Shell share price chart (Daily)
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