Boeing Co. fell sharply on Friday

Boeing Co.

• The dollar traded unchanged against most of its G10 peers during the European morning Monday in the absence of major economic events. The greenback was marginally lower only against SEK and CHF.

• Russia's Foreign Ministry has criticized the European Union for its decision last Friday to impose additional sanctions, saying the "irresponsible" move would "be greeted with enthusiasm by international terrorists."

• The additional sanctions will hurt Russia's economy, but the consequences will probably be felt by Western companies as well. One of the firms that will be most likely affected is British oil and gas company BP, which holds a 19.75% stake in Rosneft, one of the sanction target entities. At the time of writing, BP shares are trading down approximately 0.50% from their opening level.

• Russia’s Foreign Minister Sergei Lavrov said that Russia will not impose tit-for-tat measures or act "hysterically" over Western economic sanctions. Nonetheless, there is a risk that Russia could react against western sanctions by blocking the sale of metals that are widely used by car and aerospace companies. This could hit US aerospace giant Boeing, which acquires much of its titanium from Russia. Being forced to find another supplier quickly could increase its costs unexpectedly and hurt the company’s revenues.

• Boeing Co. fell sharply on Friday, breaking the lower boundary of the trading range it has been trading since the 24th of June (between the 126.00 and 130.00 barriers). Such a move reinforces the near term downtrend and flips the outlook back to the downside. However, taking into account that the price is approaching a strong support zone, near 122.00 (S1) and also bearing in mind the hourly momentum signs, I would expect some short-covering or a minor bounce before sellers regain control. A possible bounce could test, as a resistance this time, the 126.00 (R1) barrier, which coincides with the 200-day moving average (see daily chart). On the 1-hour chart, the 14-hour RSI exited its oversold field, while the hourly MACD shows signs of bottoming and could move above its trigger line within the day. In the bigger picture, as long as the price remains below the 200-day moving average, the overall outlook remains mildly bearish. A weekly close below the support barrier of 119.00 (S2) is likely to complete a failure swing top formation and could signal the beginning of a new downtrend.

• Support: 122.00 (S1), 119.00 (S2), 113.00 (S3).

• Resistance: 126.00 (R1), 130.00 (R2), 134.00 (R3).