Rolls-Royce share price forms an extremely rare bullish pattern

Rolls-Royce (LON: RR) share price has done well this year, helped by the strong performance of its key segments. It has surged to a high of 240p, the highest level since February 2022. The stock surged by more than 545% from the lowest point during the pandemic, bringing its market cap to over 18 billion pounds.

Why is RR stock soaring?

The reasons why Rolls-Royce stock price has jumped are well-known. Its civil aviation business has bounced back, with its free cash flow soaring to £401 million in the first half of the year from the previous £63 million. Its revenue soared to £3.2 billion.

The ongoing war in Ukraine has also led to more defense spending. Its revenue jumped from £1.6 billion to £1.91 billion while its operating profit rose to £261 million. Power systems revenue and cash flow rose to £1.7 billion and £22 million. In all, the company boosted its forward guidance.

Analysts believe that Rolls-Royce Holdings has more upside as demand is expected to remain at an elevated level. Also, the company has moved on past its engine problems while the new management is focused on profitability.

Now, a common question among investors is whether the Rolls-Royce share price has more upside. To answer it, we need to look at the company’s chart pattern and predict what to expect.

Rolls-Royce share price weekly analysis

Turning to the weekly chart, we see that the RR share price has been in a strong bullish trend in the past few months. Precisely, the stock has jumped from the pandemic low of 35.90p to 240p. Along the way, the stock has moved above the 50% Fibonacci Retracement level.

Rolls-Royce share price also flipped the important resistance at 152.25p (November 2021 high) into a support. Most importantly, the 200-week and 50-week moving averages have made a bullish crossover pattern. In price action, this movement is known as a golden cross and is often a bullish sign.

Therefore, the outlook for the shares is still bullish, with the next level to watch being at 304.8p, the 78.2% retracement point. This price is ~36% above the current level. The alternative scenario is where the stock plunges and retests the psychological level of 200p.

RR stock price daily chart analysis

Like the weekly chart, the daily chart reveals that the Rolls-Royce stock price has been in a strong bullish trend. It formed a strong bullish gap in July after publishing strong financial results.

Rolls-Royce shares have remained above the 50-day and 200-day moving averages. However, the Relative Strength Index (RSI) has formed a bearish divergence pattern as it has moved from 80 to 65. Therefore, there is a likelihood that the stock will hold steady at this point in the near term.

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