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BAE Systems Share Price Hits A New ATH Amid Global Tensions

About 3 months ago, I forecasted a new all-time high for BAE Systems share price. That analysis was purely based on the technicals. Little did I know that it would happen too soon. On Tuesday, 31st October, the stock of the security and aerospace firm hit a new all-time high of £11.3.

After a brief pullback, the stock closed the day at £11.04. This translated into a minor gain of 0.09% on the daily timeframe.

The stock closed the month of October with a phenomenal 10.64% rally. This rally can be attributed to the rising tensions in the Middle East and the ongoing Ukraine War. However, it is now facing a dynamic resistance from a diagonal trendline which may limit its upside in the coming days.

The strong surge in the BAE Systems share price comes amid a bearish sentiment in the UK stock market. The benchmark FTSE 100 index fell 3.76% in October as the rising bond yields in the US, coupled with the sticky inflation in the UK to drag the stock equity prices down.

The European defense stocks are facing strong tailwinds due to the increasing defense budgets fuelled by the ongoing Ukraine war. Consequently, amid this dynamic geopolitical landscape, many defense companies have upgraded their guidance for this year.

BAE Systems Share Price Outlook

There is a clear formation of the rising wedge pattern on the daily chart of BA shares. These patterns are usually formed when a bull trend is close to an end. In case of a breakdown below such a rising wedge pattern, the stock price usually targets the bottom of the wedge.

However, considering the market structure BAE systems share price forecast remains bearish. As long as the bulls hold 1035p level the outlook will remain bearish for the defense firm. A breakdown below this level may allow bears to step in.

BAE Systems share price chart
LON: BA Analysis