At the end of last week and the beginning of this week, the stock of the International Airlines Group SA (BME: IAG) came under some buying interest. This could have been due to some European governments announcing their ease on the lockdown measures imposed in their countries. This week, Boris Johnson helped IAG’s stock to fly even further up, as he revealed UK’s plans of removal their restrictions on movement and opening up the economy. From around the end of June, Brits will be able to travel, if they meet all necessary requirements. IAG, which owns British Airways, could be one of the top companies, whose services might fall under huge demand, as hungry-for-travel Brits are already starting to plan their holidays for 2021.
However, the recent slight slowdown in the stock’s upmove might be due to the fact that the company is set to release its earnings on Friday. For sure, earnings might not be on the pleasant side, as it was a difficult period for many air carriers. But it seems that the main topic on the street is not how good the results are, but how do IAG’s overall finances look, in regards to surviving this “grounded” period.
The technical picture of IAG shows a recent pop above a short-term downside resistance line taken from the high of November 24th, which occurred at the end of last week. The stock made its way towards the highs of September 9th and 10th, at 2.247 and 2.275 respectively. Given that we are seeing a slight correction lower, at the moment, there is a chance to see a bit more declines. That said, if the share price continues to trade somewhere above the psychological 2.000 mark, which is the highest point of November 2020, we will remain positive with the near-term outlook.
If the stock does move back to the aforementioned 2.000 zone, but fails to move below it, that may attract new buyers into the game. If so, IAG could travel back to the resistance area between the 2.247 and 2.275 levels, which if fails to withstand the buying pressure, may open the door for further advances. The stock might end flying to the highest point of September 2020, at 2.538, or to the 2.628 hurdle. That hurdle marks the highest point of July 2020.
The RSI is currently pointing slightly to the downside, but remains well above 50. The MACD continues to point upwards, as it runs above zero and its trigger line. The two indicators still show positive price momentum, which supports the above-mentioned scenario.
Alternatively, if the share price suddenly falls all the way below a medium-term upside support line, drawn from the low of October 30th, that could signal a change in the current trend, possibly clearing the path towards lower areas. IAG could then slide to the 1.630 obstacle, or even to the 1.503 zone, marked by the lowest point of January 2021. If there are still no new buyers at that price, the stock might drift further south. That’s when we will target the 1.358 level, marked by the lowest point of December 2020.
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