Hello and welcome to CantosCharts. My name is James Hughes, Senior Market Analyst at Alpari UK.

Today we're going to look into Rolls-Royce. Now Rolls-Royce has been one of those companies which has been in the news non-stop really since late last year because of the problems it has had with both its Trent 900 and Trent 1000 engines.

Despite that, it has had a pretty good run of taking maintenance orders and even more orders for a lot of its engine, so there has been a pretty strong performance despite the negative news that came around Rolls Royce and of course, everyone was worried about the reputational damage that those issues on that Qantas flight would have on Rolls Royce.

But, it doesn't look like that has been the case, although we are seeing a little bit more of a negative move in the share price of late.

Now after we saw the negativity of course towards the start of November last year, we saw the market aggressively come off, not surprisingly. Although the recovery was pretty aggressive, but once we got up there and really this recovery happened before we knew all the ins and outs of what had happened, before a lot of the actual figures were put out as to what had happened to this engine.

So even though the market did recover a little bit, we did see more negative news come out, then new orders come in, then more negative news come out and then more maintenance orders come in. So it was a little bit of the extra business of maintenance for the airlines, maintenance for their engines really did help it really recover out of this pretty catastrophic bit of news and as you can tell by the share price when it happened, this was a pretty catastrophic bit of news for their shareholders. But we did see it bounce around, but we have recently seen a breakout of these levels and we have seen things much more aggressively come off.

Now of course we have, on the back of the Libya, the Middle East stories and the rise in the oil price, we've seen airlines having to squeeze margins because of those oil prices. We've seen stocks come off, airline stocks come off and because of this, there has been a worry over those maintenance contracts that they've had.

So whether these airlines are going to continue to pay the likes of Rolls-Royce to service the aircraft, or they're going to start doing this in in-house or bring in other cheaper people to come in and do this and because of that negativity during this Middle East period and the tensions out there and because the oil price has been so high and it has been affecting airlines, we have seen this negativity and we have seen a break of this 620p level which really was holding things up for a while.

Again, back during that time period where we were seeing these orders come in and the negativity about the engines come in as well, it was ideal, like we had said earlier in the week about some of the other charts, that it was ideal for a degree of range trading.

So we saw some negativity, ideal to come in, buy down around those lows at around 620, push ourselves back up to those highs and then sell off again. So we did see a number of opportunities along this top line here which was starting to act as a bit of resistance on the upside. We saw a couple of spikes, but nothing that aggressive go through.

Since the break of this 620 level on the downside, you've seen the negativity has continued and this is going to be shown a little bit more by the fact that we did break and then we had an initial pullback, pushed ourselves back through that 620 level, but then again came off yet again.

So we can now see that 620 level has definitely gone both on the downside and on the upside if we start to go any higher and we are definitely looking at more of a negative aspect to this at the moment despite over the last few days this may be coming off.

But what we have seen is over these last few days, big movements. We're not necessarily seeing big differences between opening and closing prices, but intraday moves have been pretty big.

What we're also seeing is on the downside, if we do get any more negativity, we're going to be looking towards this 61.8% Fibonacci retracement of the 580, around the 584p level. Of course, this is coming from the lows we saw at the start of July 2010 to these highs that we saw in January this year on the back of us recovering from all of these stories.

So on the back of that we have seen a lot of these levels go. Of course we've seen the 38.2%, we've seen the 50% levels go. Obviously when looking at Fibonacci, the 61.8% retracement level is the most important one, so that's why this level on the downside around 584p is going to be the key one if we are looking at any moves that come down here. That's when, if we are going to see the buyers come back into this stock, it will be around that sort of level and it has also been a little more supported over here by these lows.

So there is quite a lot going on around that 584p level. If we do get these markets drop that little bit lower, which does look like it could happen, that is where all the traders are going to be looking for. A break of there will be even more significant, maybe looking down to around 550 if we do break there. But that's where everyone is going to be looking if the market does drop down that little bit more.

Thanks for listening. My name is James Hughes from Alpari UK.