Rolls Royce share price has eased from record highs set last week, but a near-term continuation looks likely. The stock is well above the 20, 50, 100 and 200 Exponential Moving Average levels and its ADX reading is at 22, underlining bullish control. Rolls Royce (LSE: RR.) traded flat at Rs 525.00 on the daily chart at the time of writing. As things stand, Rolls Royce will likely face near-term resistance at the £6 mark.
Rolls Royce share price momentum has largely been driven by a series of forecast-beating earnings results. While this is music to the ears of any investor, it also sets up the stock for potential downward pressure if the margins start declining. This has been evident with Nvidia share price, which has struggled since its last earnings release.
However, the good news for Rolls Royce is that it has a healthy order book in the defence contracting segment, whose margins are quite impressive. In addition, many airlines are upgrading their fleet, and that will help cushion the current margins in its civilian aerospace market.
The Rolls Royce civil aerospace experienced a 29% jump in revenues to £7.4 billion in 2023, and that figure is likely to rise significantly as the Trent 1000 and 7000 engines, which are expected to achieve 25%-30% time-on-wing improvement by the end of 2025. That could spur up sales significantly.
Rolls Royce share price signals a weakening uptrend, with resistance likely to be at GBX 525.8. If the sellers take control, initial support will likely be at GBX 520.2. However, extended bearishness could enable a breach below that mark to test GBX 512.8.
On the other hand, moving above GBX 525.8 will signal the onset of bullish control, and the first resistance will likely be at GBX 530.0. A prolonged bearish control could enable a break above that level to invalidate the downside narrative and potentially test 535.2.
This post was last modified on Sep 30, 2024, 13:43 BST 13:43