Shell Share Price Forecast: On the Cusp of a Breakout

Summary:

n this Shell share price forecast, we explain what to expect in the near term.

The Royal Dutch Shell share price is in a tight range as investors wait for the next catalyst. The RDSB shares are trading at 1,342p while the RDSA shares are trading at 1,400p. They are 60% above the lowest level last year and 12% below the highest level this year.

What happened: Energy stocks have done relatively well this year, helped by the relatively higher crude oil prices. Brent and the West Texas Intermediate (WTI) are trading at the highest level this year. Also, investors have bought the shares because of their recent strong results and the boosted dividend payouts. Most importantly, there are signs that demand will remain high as the world’s economy recovers.

However, there have been concerns about the companies’ transition from fossil fuels to clean energy. Indeed, Legal & General, the biggest fund manager in the UK has joined a shareholder rebellion over the company’s climate change plans. The company is calling for the company for a better plan to reduce carbon emissions.

Meanwhile, the company has disposed its Deer Park refinery after it received an unsolicited offer from Pemex, the giant oil and gas company. The transaction was valued at more than $596 million. The firm said:

“Pemex has been our strong and active partner at the Deer Park Refinery for nearly 30 years, and we will continue to work with them in an integrated way, including through our on-site chemicals facility, which Shell will retain.”

Shell share price forecast

The daily chart shows that the RDSB share price has been in a tight range. This is evidenced by the fact that the shares are at the 25-day and 50-day exponential moving averages (EMA). The shares have also formed a symmetrical triangle pattern that is shown in orange. Also, the Relative Strength Index (RSI) is at the neutral level of 50.

Therefore, in my view, since the stock’s triangle is nearing its confluence zone, it means that it will soon have a breakout. If this happens, the stock will likely rise to the YTD high of 1,532p, which is 13% above the current level. However, a drop below 1,280p will invalidate this trend.