Royal Mail (LON: IDS) share price is having a strong pullback after a good start of the year. The shares of International Distribution Services are expected to remain volatile in this month as the company is set to release its earnings report on May 18. Our analysis suggests that if the company doesn’t reclaim the 252p level, then there is a likelihood of a much bigger drop.
On Monday, the British stock market showed a positive sentiment as the benchmark FTSE 100 index gained 91 points. This also led to a positive price action in Royal Mail shares which had a 3.45% bounce from their 3-week lows. At the time of writing, the stock of the British postal service is trading at 245.8p.
According to the latest news, JP Morgan Asset Management has decided to divest out of the Royal Mail’s parent, International Distribution Services. In an official statement, JPM AM has expressed its concerns over the profitability due to the recent pay increases. The issue was also addressed in its meeting with the Royal Mail management team.
In other news, the longstanding pay dispute between the CommunicationWorkers Union (CWU) and the Royal Mail management has finally been resolved after an agreement between both parties. However, the Royal Mail share price has failed to react positively to the major development.
The LON: IDS chart reveals very critical information for the stockholders. After weeks of price action above the trendline, the shares are trading below it once again. The rejection from 252.2p resistance is not surprising at all. Nevertheless, in the coming days, I expect another retest of the 252p level.
This retest will be a very critical retest as another rejection may take the price to its 216p support. However, a breakout above this level will make the Royal Mail share price forecast very bullish. The broader market sentiment and the strength in FTSE 100 index will play a vital role in such a move.
I’ll keep sharing my updated outlook on Royal Mail shares in my free Telegram group, which you’re welcome to join.
This post was last modified on %s = human-readable time difference 14:29