NatWest Group Surges 5.65% on Strong Bullish Candlestick Breaking Key Resistance

Candlestick Theory

NatWest Group (NWG) closed the most recent session with a 5.65% surge, forming a strong bullish candlestick that pierced above key resistance levels. A review of historical price action reveals a recurring pattern of sharp rebounds from the 14.34–14.35 support zone, suggesting psychological significance. For example, on 2025-10-23, the stock tested this level and rebounded with a 1.81% gain the following session. This confluence of price action and support suggests a potential continuation of the bullish trend. However, the recent rally may have created a short-term overbought condition, as evidenced by the 5.65% move, which could lead to a pullback if buyers exhaust.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average (MA), which is currently above the 100-day and 200-day MAs, indicating a bullish bias. The 50-day MA has acted as dynamic support during pullbacks, notably on 2025-10-17 and 2025-10-08, where the price found buying interest before resuming higher. The 200-day MA, at approximately 14.40, provides a critical long-term reference; a sustained close above this level would confirm a broader uptrend. However, the 100-day MA (around 14.50) may act as a near-term resistance, suggesting potential for consolidation if the price fails to break through.

MACD & KDJ Indicators

The MACD histogram has been expanding since late September 2025, reflecting strengthening bullish momentum. The KDJ indicator, with K-line crossing above the D-line on 2025-10-15 and 2025-10-24, signals short-term overbought conditions, aligning with the recent 5.65% rally. However, a divergence between the KDJ oscillator and price action is emerging: while the K-line has peaked, the price continues to rise, hinting at a potential exhaustion of buying pressure. This divergence, combined with an RSI reading of 78.3 (overbought), raises caution about a near-term correction.

Bollinger Bands

Volatility has expanded sharply in recent sessions, with the price touching the upper Bollinger Band on 2025-10-24. This contraction-to-expansion pattern suggests a potential breakout or reversal. The middle band (20-day MA at ~14.80) acts as a critical threshold; a sustained move below this level could trigger a retest of the 14.34 support. Conversely, a break above the upper band may extend the rally but would require confirmation through follow-through volume.

Volume-Price Relationship

The recent 5.65% surge was accompanied by a significant increase in volume (5.04 million shares), validating the move. However, volume has been inconsistent over the past two weeks, with sessions like 2025-10-22 (3.09 million) and 2025-10-23 (3.24 million) showing mixed activity. This suggests that while the rally is supported, the lack of sustained volume could limit the magnitude of further gains. A declining volume during pullbacks would strengthen the case for a continuation of the uptrend.

Relative Strength Index (RSI)

The RSI has reached 78.3, entering overbought territory, which historically precedes corrections. While this does not guarantee a reversal, it signals heightened caution. For instance, on 2025-10-03, the RSI peaked at 70.4 before the price declined by 0.74% over the next three sessions. A close below 60 would reduce overbought pressure but would not necessarily negate the bullish trend, as the broader MA structure remains intact.

Fibonacci Retracement

Key Fibonacci levels from the recent high (15.37) to the 2025-09-29 low (13.95) include 14.86 (61.8%) and 14.58 (38.2%). The price has tested the 14.58 level multiple times (e.g., 2025-10-08, 2025-10-10), suggesting it may act as a pivot for near-term direction. A break above 14.86 could target the 15.37 high, while a retest of 14.58 would validate its role as a support.

Backtest Hypothesis

A backtest using the RSI-based strategy (buying on dips below 30 and selling above 70) would need to account for NWG’s recent volatility. For example, the 2025-10-23 close at 14.52 (RSI ~30) could have triggered a buy signal, followed by a sell at 15.37 (RSI ~78.3). Historical data from 2025-09-09 to 2025-10-24 shows that the strategy would have captured a 5.65% gain but also faced a 0.62% loss on 2025-10-23. The confluence of RSI overbought conditions and Bollinger Band expansion suggests that a sell signal would likely trigger a retracement to the 14.58–14.34 range, aligning with Fibonacci support levels.