After three days of gains, the Royal Mail share price closed above the 200-Day Moving Average on Monday for the first time in four months. Royal Mail (LON: RMG) started this week in the same rich vein of form it finished the last. As of Monday’s close, shares of the UK’s premier delivery company have risen 21.25% since the start of the month.
The recent rush of buying activity is due to last weeks announcement the company is to reward shareholders with a £200 million share buyback and a £200m special dividend. The news follows a stellar half-year trading update which revealed a 7% rise in revenue. As a result, the price has recovered the significant Moving Averages and broken above long term trend resistance which should be considered highly constructive. Furthermore, a worrying rise in Cvid-19 cases in Europe threatens to spill over into the UK, which could prompt a return to lockdowns. Whilst would be bad news for the economy as a whole, it could provide a significant tailwind for the Royal Share price.
The daily chart shows RMG cleared trend resistance at 466p on Thursday. Furthermore, the strength continued through Monday, lifting the price above the 100 DMA at 478.2p and the 200-Day at 499.7p.
As long as the share price remains above the 200 DMA, the outlook is undoubtedly bullish, targeting June’s three-year of 606p.
Considering the bullish momentum, 606p looks an achievable target. However, this view depends on the price remaining above the 200-DMA. On that basis, a close below 499.70p invalidates the thesis.
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This post was last modified on Nov 23, 2021, 06:40 GMT 06:40