BAE Systems Share Price: Downward Reversal or a Dip-Buying Opportunity?

After pushing above the 830p price mark, the BAE Systems share price failed to attain its previous heights of July 2022 and is down steeply this Friday. The BAE Systems share price is down 3.22% after the stocks of the defence company were heavily offered on Friday. Despite the negative performance on the day, the BAE Systems share price is up 2.76% for the month as of writing. 

BAE Systems has been on a bullish run for most of 2022 as European nations and the UK rushed to bolster their military capabilities in response to the Russian invasion of Ukraine. The stock has seen a 29.1% increase since May 2022. However, having reached recent tops above the 800p mark, the stock’s advance has started to stall. 

From a technical analysis standpoint, the price behaviour of the stock heading into the 4th quarter of 2022 will depend on whether the bulls can defend the major support at the 800p psychological mark. The price action is now testing this pivot. 

BAE Systems Share Price Forecast

The steep decline seen on the day comes off rejection at the 834.8 resistance level. This barrier marks the completion point of the double bottom, following the neckline break at the 800.4 psychological price mark to the upside. Friday’s candle forms a bearish engulfing candlestick with the 29 September candle.

This pattern sets up a potential decline toward the 61.8% Fibonacci retracement level from the 20 September low to the swing high of 30 September. This new target lies at 785.3 and marks the lows of 23/28 September 2022.

Attainment of this mark depends on the bears forcing a breakdown of 800.4. If there is further price deterioration, the bears may find additional harvest points at the 776.8 support (78.6% Fibonacci retracement level and 9 June/12 August lows) and at 760.6 (28 July and 5 September lows).

On the other hand, a bounce on the 800.4 support level forces the price back toward the 826.0 resistance (28 June and 8 July highs). This barrier must be uncapped by unopposed bullish action for the intraday high at 834.8 to come into the mix as the next target. Above this level, the 847.4 all-time high forms the new barrier to the north, being the site of the previous high seen on 4 July 2022.

BAE: Daily Chart