Investing 30-05-2023 07:01 226 Views

Rolls-Royce share price outlook as volatility, volume slips

Rolls-Royce (LON: RR) share price has been dead money in the past few days as investors react to the company’s turnaround and recent financial results. The stock was trading at 150p, where it has been since April. Still, it has jumped by over 131% from the lowest level in 2022. 

Latest Rolls Royce news

The latest manufacturing news is that Rolls-Royce is considering cutting thousands of jobs as the new CEO works to turn around the company. In a report, the Sunday Times said that Tufan Erginbilgic was considering cutting about 3k jobs across the board. In a rejoinder, the company said that it had not yet made a decision on these job cuts yet. 

Rolls-Royce is going through a turnaround as it seeks to improve its profits and reduce its mountain of debt. In 2020, the company laid off over 9,000 workers as it worked to preserve cash due to the Covid-19 pandemic. 

These job cuts will come at a time when the company is benefiting from the rising defense spending and a recovery in the civil aviation industry. The number of flying hours have jumped ahead of the busy summer season, which is important since the company makes most of its money in this industry.

In May, the company said thatr the large engine flying hours rose to 83% of 2019 levels in the four months to April. For the full year, the company hopes that this range will be between 80% and 90%. 

Meanwhile, Rolls-Royce is in legal trouble in India where the Central Bureau of Investigation filed criminal charges against the company. The agency alleges that Rolls-Royce Holdings engaged in a criminal conspiracy to cheat the government. This suit relates to the supply of Hawk aircraft, which is manufactured by BAE Systems.

The criminal case could cost Rolls-Royce Holdings millions of dollars as it work to turn around its business.

Rolls-Royce share price forecast

The daily chart shows that the RR stock price has been in a strong bullish trend this year. Recently, however, the stock has been in a tight range in the past few days. It remains slightly above the 50-day and 25-day exponential moving averages (EMA).

The Average True Range (ATR) has dropped to the lowest level since February 24th. This means that the shares have seen their volatility slip. Volume has also been in a downward trend as shown in black. 

Therefore, there is a likelihood that the stock will continue consolidating in the near term and then have a bullish breakout to 200p in the near term. A move below the support at 140p will invalidate the bullish view.

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