The Royal Mail share price failed to show investors a return in August, finishing the month with a 4% loss. But will RMG fare better in September? Despite losing ground recently, Royal Mail Group (LON: RMG) still boasts a 180% increase over the last 12 months. However, the habits that propelled the shares to a three-year high in June are starting to change rapidly.
Much of the impressive performance was undoubtedly due to the Covid-19 pandemic. With the high streets closed, consumers flocked to online shops. As a result, Royal mail witnessed a surging demand for its services. This led to stellar trading results and RMG increasing its shareholder dividend payment. However, high streets are now fully open for business. Furthermore, many of the shoppers that supported the Royal Mail Share price have returned to work. This leaves the future for the share price hanging in the balance.
The daily chart shows the Royal Mail share price is painting itself into a corner. For the past four months, the price has trended lower in a narrowing wedge pattern. However, more recently, a more concise trend line has formed and is currently seen at 498p.
This is the first significant area of resistance and has so far proved unscalable. Furthermore, if the price continues to respect this trend, it could drop to the trend line support.
A trend line from the March low is currently visible at 480p. This is a major support level, and a failure to maintain it should lead to follow-through selling. However, it’s the 200-day moving average at 466.50 that is the must hold level. A close below 466.50p would indicate a severe deterioration in technicals and target the 430p high in February.
However, if RMG climbs above the descending trend line at 498p, the outlook turns much brighter. In this event, upside targets include the 100 DMA at 512.8p and the 50-day at 514.6p. And if those fall, 550p should follow.