International Airlines SA Stock Rebounds, but Only Slightly

The International Consolidated Airlines Group SA stock (BME: IAG) traded higher on Thursday, after it hit support at 1.818. However, the overall picture is not that bright. On Tuesday, the stock fell below the neckline of a complex “Head and Shoulders” formation on the 1-hour chart, which has turned the short-term outlook negative, in our view. Therefore, despite today’s rebound, as long as the share price stays below the neckline, we will continue aiming lower.

The current recovery may continue for a while more, even above 1.904, a temporary peak formed overnight. This may allow advances towards the 1.980 zone, marked by the inside swing low of October 1^st, but we see decent chances for another round of selling to be initiated from there. If this is the case, we could see another test at around the 1.818 zone, the break of which would confirm a forthcoming lower low and may see scope for declines towards the 1.737 area, defined as a support by an intraday swing high formed on September 17^th, as well as by the inside swing high of September 13^th.

Taking a look at our short-term oscillators, we see that the RSI rebounded and exited its below-30 zone, while the MACD, although negative, has also turned up and crossed above its trigger line. Both indicators detect slowing downside speed and support the notion for some further recovery in this stock before the next leg south.

Now, in order to abandon the bearish case, we would like to see a clear recovery above 2.086, an intraday swing high formed on Monday. This could confirm the stocks return back above the H&S neckline and may allow advances towards Friday’s peak, at around 2.182. If market participants are not willing to stop there either, we may experience advances towards the high of October 4^th, at 2.257.