The Rolls-Royce share price struggled in November 2021 as concerns about the new wave of the Covi-19 pandemic. The RR stock managed to decline from a high of 150p to a low of 116p. This was a 22% drop. It is now trading at 122p, which is about 5% above the lowest level in November.
The biggest catalyst for the Rolls Royce share price in November was that many countries reported more cases. Some, like Austria, also announced full-scale lockdowns.
As the month drew to an end, there were additional concerns about the Omicron variant. The variant, which emerged from South Africa, seems to be spreading faster and is more evasive to the existing vaccines. As a result, companies like Japan and Morroco have announced a ban on foreign travellers.
Unfortunately, this has happened at a time when most aviation were recording strong demand for their services. Therefore, with a new variant in place, there is a likelihood that this demand will wane in the coming weeks. Indeed, in a statement on Wednesday, EasyJet announced that its demand was starting to wane because of the variant. Many customers also cancelled their bookings.
In my view, I believe that the market is overreacting about the virus and that its impacts will be relatively muted. Besides, the world has done relatively well even amid the Delta variant. Therefore, fundamentally, a case can be made for the Rolls-Royce share price.
The daily chart shows that the RR share price made a bearish breakout in November. It moved below the key support level at 137p. This was a major support since it was the highest level since October and December 2020. It also moved below the neckline of the double-top pattern. It also moved below the 25-day and 50-day moving averages while the MACD has moved below the neutral level.
Therefore, there is a likelihood that the Rolls Royce share price will retreat to about 100p in the first part of the month. I then expect it to resume the bullish trend as fears of Omicron ease.
This post was last modified on Dec 01, 2021, 06:21 GMT 06:21