It’s one of independent analyst Alistair Strang’s favourite airlines, but which direction does he think the shares might go?
I’ve a soft spot for Air France-KLM (EURONEXT:AF), so was interested to see the airline rated as “Strong Sell” in the listings of ‘Most Active Shares’ on the French exchange. This alone made Air France a useful candidate for this week’s delve into European derivatives.
Their share price is starting to look quite fragile. Similar to everything else, the price took a hammering with the pandemic drop last year and, in common with other companies in the sector, is failing to show any great recovery. Ryanair, amazing to note, are unusual in this regard, recovering to the price height pre-Covid.
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As the chart below shows, Air France has been slithering down the blue downtrend, breaking through, but failing to make a solid movement.
Rather unhelpfully, this sort of nonsense tends end with a sharp, vivid, price movement, the only question being, ‘which direction?’. We fear, in this instance, some excuse shall be discovered to provoke a sharp reversal.
Weakness below just €3.75 calculates as capable of reversal to €2.67, a level at which we’d hope for a bounce. If broken, our secondary works out at €1.56 eventually. Should this number appear, the price ‘almost must’ rebound as we cannot calculate anything below such a point.
Glancing at the chart, there is already an argument favouring bounce potentials at €2.67, this matching the lows of 2020 and doubtless becoming attractive to those who will decide “Double Bottom” and take a long position.
Air France KLM, thus, shall perhaps prove worth keeping an eye on in the weeks ahead.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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