The forecast is not looking good for the airline industry as share prices of major airlines have plummeted this October, following the general negative trend that we have been observing since late 2019. This comes as no surprise to us, considering October is often the worst month of the year for many airlines; this is due to it not being situated within any major holiday period as well as it being a period of high risk and volatility as airlines enter the months of November, December and January; all of which are prone to fluctuating levels of capacity. Here is a chart that represents the evolution in Easyjet’s share price from late June to late October:
We can envision several possible outcomes when looking at this chart. Firstly, we must see for how long Easyjet will stay above the SMA50 line. We must also judge whether or not the horizontal resistance line is of more importance over the long-term than the downtrend line. In our opinion, it seems unlikely that any major breakthrough over the SMA50 line will result in anything more than a short-lived spike, before a return to the general downtrend, as we saw in mid-August. We must also notice that up and down days have been alternating at regular intervals (every 2 or 3 days) since late September, and that few new indicatory trends have recently been established. This could mean going above and below the dotted red line for months, following a slightly negative longer-term trend. Gaps between max and min points on our price curve and the red dotted line are similar in difference (approx. 70p), which may chase out the volatility in the market. It’s been looking too smooth, but you never know. We will see… McCloud,30th October 2022.