Recently, positive reports started coming out that the demand for holiday tours in Europe is rising, especially in the mid- and north-European regions, where the main destinations are the southern European countries. In particular, Germany has seen a rise in the number of holidaymakers booking flights to warmer countries to enjoy their summer holidays. And that number is believed to go bit higher. However, not everything is as exciting as it seems, mainly due to the epidemiological situation in Europe, according to the European Medicines Agency. It looks like most European states could start imposing lockdowns again after summer. Such uncertainty is keeping some airline stocks, such as the Deutsche Lufthansa AG (FRA: LHA), on the lower side, despite positive news reports about rising demand for holidays.
The technical picture of LHA on our daily chart shows that from around the beginning of March, the stock has been drifting lower, as it continues to trade below a medium-term downside resistance line taken from the high of March 1st, meaning that the medium-term trend remains to the downside. However, this week the share price found strong support near the lowest point of June, at 9.20, from which it rebounded slightly. Therefore, in order to get a bit more comfortable with lower areas, a break of that 9.20 hurdle would be needed.
If, eventually, the break below that support hurdle happens, this will confirm a forthcoming lower low, possibly clearing the path for further declines. LHA may fall to the 8.76 obstacle, or to the 8.57 zone, marked by the lowest point of December and the highest point of October 2020. Initially, the stock could get halted around there, but if there are still no new buyers in sight, the slide might continue and the next target may be at 8.10, marked by an inside swing high of November 4th, 2020.
Both indicators, the RSI and the MACD, are pointing slightly higher, at the time of writing. However, the RSI remains below 50 and the MACD is currently sitting slightly above the trigger line, but well below zero. Overall, the two oscillators continue to show negative price momentum, which supports the scenario mentioned above.
Alternatively, for us to consider a move to some higher areas, a break of the aforementioned downside line would be needed. Also, a push above the 10.32 barrier, marked by the current highest point of July, could strengthen the upside scenario. More new buyers may join in, possibly sending the share price to the 10.65 obstacle, or to the 11.24 hurdle, which is marked by the highest point of June. The stock could get a temporary halt around there, but if the buying interest is still high, LHA could overcome the 11.24 obstacle and continue picking up altitude. That’s when we will aim for the highest point of May, at 11.43, or for the 11.71 level, which is the highest point of April.
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