Rolls-Royce Share Price Punched in the Face as Risks Emerge

Summary:
• Rolls-Royce share price has been under intense pressure in the past few days and the situation could get worse. What next for Rolls Royce?

The Rolls-Royce share price is seeing a triple-punch as the ongoing geopolitical tensions remain. The RR stock is trading at 106p and is expected to fall further this week. It has already crashed by 30% from its highest level this year. As a result, its total market cap has dropped to about 11 billion pounds as investors assess the impacts.

Rolls-Royce punched amid the rising tensions

Rolls-Royce Holdings is being affected substantially amid the rising geopolitical tensions in Europe. The company is exposed in several ways. First, during the weekend, the European Union announced that it will block Russian airlines from its airspace. Russia has also threatened to retaliate against these sanctions. Therefore, there is a likelihood that Rolls-Royce will suffer as the global aviation industry struggles.

Second, the ongoing crisis has pushed the price of crude oil to the highest point in more than a decade. Again, this will have an impact on the aviation industry since Rolls-Royce Holdings makes money from the civil aviation industry.

Third, the company has said that it does about 2% of its business in Russia meaning that it will be affected by the ongoing sanctions. Most importantly, it sources its key raw materials like titanium from Russia. On the positive side, its defense contract side of business will likely benefit as the crisis continues.

Rolls-Royce share price forecast

The daily chart shows that the Rolls-Royce share price crashed to a key support level at 94.84p last week as the invasion started. It then staged a dead-cat bounce and ended the week at about 106p. Now, there is a likelihood that the shares will be impacted by the new restrictions. 

Rolls Royce share price has also moved below the 25-day and 50-day moving averages while the MACD has moved below the neutral level. It also seems like it has formed a small head and shoulders pattern. Therefore, there is a likelihood that the RR share price will keep falling as bears attempt to move below last week’s low of 94.84p. This view will be invalidated if the price moves above 120p.