"NAB - will the new strategy yield a share price of $15 or $35 ... ? "

NAB - Daily chart 18th Feb 2011

If we look at the daily chart of NAB as at 18th February 2010, it looks as if NAB has broken out to the repetitive extended Wave 4 channels and is heading up towards a near term target of $27 by Mid March.

But has it really begun to rise  ?

If we look at the weekly chart of NAB below, the price at present does look as if it is rising, but the overall trend is down towards a low of $15 to complete the Wave 5 sequence.

NAB - Weekly chart 18th Feb 2011

The key question here is how likely is a price drop to $15 for NAB in order to complete a Wave 5 low ? In my opinion it is not very probable.

Firstly if we look at the monthly chart below, the wave sequence is a long term upward trend. This links well with the indications on the weekly and the daily charts, but is hardly convincing.

NAB - Monthly chart 18th Feb 2011

Potentially the weekly chart offers us some clues. In the updated weekly chart below, the immediate price is heading towards a near term high of $34 around the end of July. If the price of NAB does in fact rise, and gets past $30.50, which is the current Wave 4 high, then it is odds on that we would get an Elliott Wave recount and the current wave 3 low would be reset as the start of a Wave 5 high with the current Wave 4 relabelled as a Wave 3.

NAB - Weekly chart 18th Feb 2011

 In fact in the above chart, the pivot low (P) which is around $20.92 is also at the .612 retracement level with the bulk of the price action sitting right on the .5 Fibonacci retracement level. This point could easily become the Wave 4 low in a new five wave sequence.

There is one problem with this possibility and that is the Profit Taking Index (PTI) although it is above 37, marginally sitting at 38, the price action which is sitting on the 50% retracement line is well below the Wave 4 bands. This would indicate that if price did in fact rise, it was more likely to make a double top around $30.50 rather than a new high at $35.

If in fact other external factors, such as China, heavily influenced the financial sector and NAB's price did halt and reverse, then again because the existing Wave 4 had a poor PTI and exceeded the Wave 4 bands, it is likely to only make a double bottom around $20 as an initial target with $15 being the final stop.

So back to the original question - will NAB's new pricing war strategy be successful and lead to a share price of $25 or will they give in to temptation, join back with the other banks, bump up fees and head towards $15 a share?.

Cheers