TUI Group AG (ETR: TUI1) got hit hard by the pandemic lockdowns throughout Europe, as the company mainly operates its flights in the “old continent”. Group’s revenues have fallen more than half, when the company reported its earnings back in December. But the stock, although it took a deep dive in February/March of last year, managed to remain stable, without any huge fluctuations. Such activity might show that investors are not giving up on the company yet. The hope is that European restrictions will get lifted soon and hungry-for-travel consumers will start actively booking flights again. An issue may arise if the company will not be able to show profitability when the movement bans will be removed. But until then, it seems that the interest in the stock is fuelled by hope, which may keep investors interested, for now.
Looking at the technical picture of the TUI1, we can see that, from the end of February, the stock seems to be coiling up and preparing for a stronger move. Now, the fact that it is stuck inside a symmetrical triangle forces us to stand pat, for now. However, the share price is still trading above a medium-term tentative upside support line taken from the low of October 26th. Also, to support the somewhat positive outlook, the current triangle formation could also be considered as possible bullish pennant, where the prevailing trend is to the upside. That said, we will take cautiously-bullish approach, for now, and wait for some confirmation breaks first.
If the stock ends up breaking through the upper side of the triangle and then rising above the 5.44 barrier, marked by the highest point of February, this could strengthen the upside scenario idea. More buyers might join in and drag TUI1 to the 5.60 obstacle, or to the 5.96 zone, marked by the high of November 27th. The stock might stall there for a bit, or even correct back down slightly. That said, if the share price remains somewhere above the 5.44 hurdle, TUI1 could get picked up again by new buyers. If so, the stock may travel back to the 5.96 obstacle, a break of which might clear the path to the 6.44 level, which is the highest point of November 2020.
The RSI and the MACD are currently flat, which is in line with the fact the stock is coiling up. But the fact that the RSI is above 50 and the MACD is above zero and fractionally above its trigger, shows positive price momentum, which is supports the above-discussed scenario.
Alternatively, if TUI1 breaks through the lower side of the triangle and then slides below the 4.59 zone, marked by the low of February 26th, that could keep new buyers away from entering for a while. The share price may then slide to the 4.27 territory, which if fails to provide support and breaks, might set the stage for a move to the 3.95 level. That level marks the highs of February 1st, 2nd, 3rd and the low of February 17th.
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