Raytheon Technologies Corp leads the aerospace and defence sector with strong momentum. Recent geopolitical events have fueled this momentum. A technical analysis using the Elliott Wave pattern indicates a strategic breakout for the stock.
The Elliott Wave analysis shows RTX’s advance from its 2020 low. Wave I peaked at $106, Wave II at $68, with Wave III currently ongoing. The weekly cycle suggests three waves toward new highs. The stock aims to complete five-wave advances from both 2020 and 2023, projecting a path toward $222.
This extension is anticipated within wave ((3)), potentially propelling Wave III past $250. RTX is expected to extend through a series of third and fourth waves. The April 2025 low of $112 is the key invalidation level, where corrections must hold above. Pullbacks provide buying opportunities in 3, 7, or 11-swing patterns.
The bullish cycle suggests more upside potential. Traders are advised to target entries during daily pullbacks, using the Elliott Wave methodology for timing. The proprietary Blue Box system helps identify reversal zones, enhancing clarity and confidence. This disciplined strategy aims to capture the next major advance for RTX.
The aerospace and defense sector remains strong, fueled by recent geopolitical instability and increased government spending. The recently passed FY2026 defense budget showed a 7% increase in funding for advanced missile systems, a core part of RTX’s portfolio. This fundamental backdrop supports the ongoing bullish technical structure we have been tracking.
Looking back from our current position in January 2026, the technical roadmap we outlined last year has proven accurate. The key invalidation level of $112, based on the April 2025 low, was never breached during the minor market corrections in the second half of 2025. This confirmed the strength of the underlying trend and set the stage for the next major advance.
Derivative traders should use any daily pullbacks to position for the extension toward $222. Buying call options with three to six months until expiration provides leverage to this expected move. Consider strikes around the $190 to $200 level to balance premium cost with potential upside.
For a more risk-defined strategy, bull call spreads are an effective tool. By simultaneously buying a call at a lower strike price and selling one at a higher strike, traders can reduce their upfront cost. This approach is ideal for targeting a specific price move, such as the initial thrust into the $220s.
Selling cash-secured puts during corrective dips is another way to express a bullish view while generating income. Targeting strike prices near established short-term support levels allows you to collect premium on the expectation that the stock will remain above those levels. This strategy aligns perfectly with our methodology of entering the market after a 3, 7, or 11-swing correction.
Implied volatility should guide the timing of these trades. During brief periods of fear or pullback, volatility tends to rise, making the premiums received from selling puts more attractive. Conversely, entering long call positions is often more cost-effective when volatility is subdued during periods of consolidation.
The stock’s record backlog of $204 billion, reported in the Q4 2025 earnings call, provides strong evidence of future revenue growth. This reinforces our view that the ongoing wave structure is well-supported by business fundamentals. Each dip remains an opportunity to join the incomplete bullish sequence from the 2023 lows.
