Current trend

Shares of Raytheon Technologies Corp., the US aerospace and defense conglomerate, have been falling for the third week, trading around 95.60.

The general pressure on the stock market has recently been exerted by experts’ expectation of the resumption of the US Federal Reserve’s rate hike, which was confirmed yesterday by the head of the regulator, Jerome Powell. The persistence of the “hawkish” rhetoric will increase pressure on the US economy soon but the current weakening of the issuer’s quotes is temporary, as global fundamentals continue to support them. Thus, after the final retreat of the coronavirus epidemic, the commercial aviation market is rapidly recovering, reaching the volumes of 2019 and providing orders to the aviation divisions of the corporation.

Continued international tensions are increasing the volume of defense contracts, notable among which is the Pentagon’s 1.15B dollars order for the AIM-120 Advanced Medium-Range Air-to-Air Missiles (AMRAAM). The growth in the number of orders even caused experts to fear the ability of Raytheon Technologies Corp. to fulfill them against rising prices for raw materials and components, problems in supply chains, and a lack of qualified personnel, however, the long-term prospects for the development of the corporation remain positive.

Support and resistance

The trading instrument broke below 96.88 (Murrey’s level [7/8]) and may continue to fall to 93.75 (Murrey’s level [6/8]) and 90.62 (Murrey’s level [5/8]). In case of a reverse breakout of 96.88, supported by the middle line of Bollinger bands, the quotes will be able to return to 100.00 (Murrey level [8/8]) and 103.12 (Murrey level [ 1/8]).

Technical indicators allow for a price reversal and the beginning of an upward movement: Bollinger bands and Stochastic are reversing upwards, while the MACD histogram is decreasing in the negative zone.

Resistance levels: 96.88, 100.00, 103.12.

Support levels: 93.75, 90.62.

Trading tips

Long positions may be opened above 96.88 with the targets at 100.00, 103.12 and stop loss around 94.85. Implementation period: 5–7 days.

Short positions should be opened below 93.75 with the target at 90.62 and stop loss around 96.10.