The Rolls-Royce share price relentless rally accelerated on Wednesday as investors continuing placing bets about a rebound of the global economy. The RR stock jumped to 120p, which was the highest level since March 19. It has risen by more than 38% from the lowest level in July.
Aviation sector rebounds
The aviation sector is doing relatively well even as the world faces the Delta variant. This is evidenced by the strong performance of airline stocks like IAG, EasyJet, and Ryanair.
The sentiment improved on Tuesday when Delta Airlines announced a major order with Airbus Group. The company placed an order of 30 additional Airbus A321neo aircraft to meet its rising demand. This brings the total number of outstanding orders to 155.
While these planes will not be powered by Rolls-Royce engines, the order was positive for the company because it boosted sentiment in the industry. They will be powered by the next-generation Pratt & Whitney engines.
The new orders came a few weeks after United Airlines ordered 270 planes from both Boeing and Airbus. 200 of these planes will come from Boeing while 70 of them will be manufactured by Airbus. United has also ordered supersonic jets from Boom Technologies.
The performance of the aviation sector is important for Rolls-Royce because it makes most of its money in the industry. The rest comes from its power and military contracts business.
Rolls-Royce share price forecast
The four-hour chart shows that the Rolls Royce share price has had an excellent performance recently. Indeed, a closer look shows that it is the best performing stock in the FTSE 100 index in the past 30 days.
Along the way, the stock has moved above the 25-day and 15-day moving averages (MA) while the MACD has been in an upward trend. The stock has also moved above the important resistance level at 113.25p, which was the highest level in June.
Therefore, the path of least resistance for the shares is in the upside. As such, the stock will likely keep rising as bulls target the next key resistance at 130p.This view will be invalidated if the stock declines below 113p.