In the beginning of this year, the stock of the International Airline Group (BME: IAG) managed to pop higher on the expectation that there might be an increase of consumers booking their holiday flight tickets for the summer holidays. Also, the fact that some movement restrictions across Europe were lifted for the summer period, this gave hope that holidaymakers would be eager to travel again. But in reality, different EU states had imposed different self-isolation requirements after entering the country, which made life of travelers very inconvenient, forcing some to abandon their initial holiday plans. And this had become clear already at the beginning of summer, as pre-bookings were not hitting the necessary numbers. IAG stock is a good reflection of this situation, as it continues to decline since the end of spring. But given that the summer holiday season is at its end, autumn doesn’t bring much reassurance, as there are rumors that new restrictions could be adopted again across various EU countries. Although IAG is a relatively cash-rich company and has good potential to grow in the future, in the short run its stock might stay under downside pressure.
From the technical side, the stock is currently trading below a short-term downside resistance line taken from the high of June 17th. However, it continues to balance above one of its key support areas between the 1.791 and 1.814 levels, marked by the low of February 18th and the lowest point of July respectively. In order to aim for a further move south, a drop below the above-mentioned support area would be needed.
If that drop happens, this will confirm a forthcoming lower low, potentially keeping the buyers away from the playing field for a while. IAG might then drift to the low of February 12th, at 1.631, a break of which could set the stage for a move to the 1.503 zone. That zone marks the current lowest point of this year.
Looking at the RSI and the MACD on our daily chart, both indicators are currently pointing lower. In addition to that, the RSI is below 50 and the MACD is below zero and its trigger line. The two oscillators show negative price momentum, which supports the above-discussed scenario.
Alternatively, if the stock moves higher, breaks the aforementioned downside line and then climbs above the 2.018 barrier, marked by the high of August 11th, that could attract more buying interest. IAG may then fly to the 2.097 obstacle, or even to the 2.151 hurdle, marked by the high of July 28th, where it could receive a temporary hold-up. That said, if there is still enough buying interest near that hurdle, the share price might travel further north, to the 2.291 level, which is the highest point of July.
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