easyJet share price bounce hits resistance
After rallying 40% from its March low, can easyJet push past further resistance?
easyJet slumped 65% before bottoming out in mid-March, with the stock finding support at 494p after weeks of downward pressure driven by the economic impact of Covid-19 on the travel industry.
After hitting its March low, the stock has rebounded close to 40%, with the low-cost airline closing at 652p a share on Thursday.
The big question for easyJet’s share price in the coming weeks depends heavily on how long the Covid-19 pandemic persists and how deep its impact becomes for airlines, with Citi analysts warning that the industry faces punitive government bailouts earlier this week.
‘As government intervention seems an inevitability amongst the majority of the European airlines, the conclusion is that there will be no free lunch for any airline,' Citi analysts said in a note to clients.
‘Europe is simply less well-capitalised vs other historical crises and arguably worse prepared for such demands than in previous cycles.’
Citi downgraded its rating for easyJet from ‘buy’ to ‘neutral’ this week but stressed that the low-cost airline is firmly in the ‘middle of the pack’, with it more concerned about Germany’s Lufthansa and Air France-KLM, opting to issue the pair with a ‘sell’ rating.
easyJet: technical analysis
easyJet’s share price has fallen dramatically over the past two months. But it was already in a sideways movement over the longer-term, the shares having twice failed to push on through £15 level, according to Chris Beauchamp, chief market analyst at IG.
Dips in 2016 and 2019 found support in the 750p – 800p zone, but the latest decline has fallen below these levels. In addition, monthly momentum indicators such as stochastics and MACD have rolled over.
Looking to trade easyJet and UK stocks? Open a live or demo account with IG today.
While the hourly chart shows that the shares have recovered from the lows of last week, and in spectacular fashion (up 38%), the uptrend is encountering resistance at 684p.
This is around the lower end of the gap down from 13 March. A close above this head towards 800p and trendline resistance from the February highs. We have seen a higher intraday low this week, and if the price clears 700p the more bullish view will continue to emerge. A reversal below 550p would negate the bullish view and bring 500p and then 412p into view.
You can go long or short easyJet with IG using derivatives like CFDs.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
React to global volatility
Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and only incur a fee when triggered
- Round-the-clock assistance – our highly skilled team are available when you need support
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
