Rolls Royce under pressure after the release of 1H trading update

Rolls Royce, the engineering group, posted a 1H trading update.

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Rolls Royce, the engineering group, posted a 1H trading update: 

"Our Civil Aerospace business has experienced a significant reduction in demand due to the effects of COVID-19. Widebody engine flying hours fell by approximately 50% in the first half, compared to the prior year period with an approximate 75% decline in the second quarter. 

As a result of our cash mitigation actions and supply chain management we expect our rate of cash consumption to significantly reduce in the coming months, resulting in a full year free cash outflow of approximately £4 billion."

From a chartist point of view, the stock price remains in a bearish trend and is approaching from the lower end of its short term consolidation range at 235.5p. Prices remain capped by the 20WMA currently at 248p. The weekly RSI is reversing up from its oversold area but remains below 50%. A break below 235.5p would call for a new down move towards 130p. Alternatively, a rebound above 348p would call for a test of the upper end of the trading range at 427p.

Source: GAIN Capital, TradingView

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