The Royal Mail share price declined by more than 1.7% on Monday as investors reflected on the upcoming reopening of the UK economy. The RMG stock is trading at 510p, which is 4.85% below the year-to-date high of 533p.
What happened: Royal Mail has been one of the top performing stocks in the past year as the pandemic led to more demand for parcel services. Indeed, the company’s revenue has surged in the past few quarters. It has also committed to start delivering on Sunday as it deals with the rising demand.
The company’s share price is falling as the Boris Johnson administration starts to consider reopening the economy now that it has vaccinated millions of people. This could lead to lower demand for parcels and online shopping.
Some analysts and Royal Mail bulls believe that the company’s fortunes will remain since people have tested the benefits of online shopping and parcel delivery. Others believe that the company’s shares are overvalued and that they are ripe for a pullback.
The four-hour chart shows that the Royal Mail share price has been in a strong upward trend recently. However, in the past few weeks, the momentum has waned, pushing the stock from a year-to-date high of 528p to 508p. It remains above the ascending black trendline that connects the lowest levels from November 10 last year.
Therefore, in my view, the stock will remain in a bullish trend so long as it is above this trendline. Any move below the line will open the possibility of the stock moving below 500p.
