European airline companies have experienced not the best of times lately, with disruptions from social, political and economical aspects. There was a lot of news around certain airlines not offering attractive compensation packages to their pilots, which had a knock-on effect on easyJet as well. Then there is uncertainty over the relations between Britain and the EU, which could also impact easyJet specifically, as it carries a lot of British holidaymakers in and out of Europe. In addition to this, of course, a worry over the future profitability of the company, as fuel costs continue to rise.
From the technical stand point, since the reversal on the 20th of June, EasyJet stock lost around 35% of its value. From the medium-term perspective, easyJet is trading below a downside resistance line, taken from the peak of the 20th of June. That said, from a very short-term perspective, we could see easyJet share price retracing upwards for a bit before it could get hit by sellers again. Of course, looking at the daily chart, the stock seems quite oversold as the RSI shows signs of bottoming near 20, therefore, a small correction to the upside could be possible. That’s why for now, we will play the waiting game and look for a good opportunity to sell the stock again at slightly higher levels.
A good move and a close above 1240 could confirm the case for a corrective rebound. The 1240 area acted as good area of support back in October and the beginning of November last year. The next potential area of resistance which could get tested could be the 1305 level, marked by the low of the 26 of September and the inside swing high of the 16th of November 2017. This is where it could become interesting for the bears again, as we could see them jumping in again and potentially driving the stock back down, aiming for the 1135 hurdle. That hurdle acted as very strong support in September of 2017. Certainly, let’s not exclude the possibility of the share price traveling a bit higher and exceeding the previously mentioned 1305-dollar price tag. But as long as the price remains below the abovementioned downside resistance line, we will remain bearish over the near-term outlook.
For us to get comfortable with the upside scenario, we would need to see a close above the downside resistance line and the 1382 level, marked by the low of the 11th of September. This way, we could start aiming for the 1445 obstacle, which was the peak of the 20th of September. If the obstacle won’t be able to withstand the pressure from the bulls, this could open up the gate towards levels like 1505 and 1547. The latest was the high of the 4th of September and also acted as strong support from the end of January, up until the start of August.
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. JFD Brokers, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD Brokers analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyzes and must therefore be viewed by the reader as marketing information. JFD Brokers prohibits the duplication or publication without explicit approval.
FX and CFDs are leveraged products. They are not suitable for every investor, as they carry high risk of losing your capital. You should be aware of all the risks associated with trading on margin. Please read the full Risk Disclosure.
Copyright 2018 JFD Brokers Ltd.