IAG: This event will signal a share price recovery

The COVID-19 outbreak has caused havoc for the airline industry. Our chartist looks for recovery signs. 

International Consolidated Airlines Group (LSE:IAG) (aka British Airways) 

Virus fears certainly appear to be fouling up airline share prices, but it's perhaps worth mentioning neither International Consolidated Airlines Group (LSE:IAG) nor easyJet (LSE:EZJ) are yet trading in a zone where panic makes sense. They're both certainly pretty close to messy, their prices not yet entering the official "lower low" flight level to misery.

However, we've decided it's probably best not being flippant about coronavirus. News coverage now pollutes every single section of Google News - World / Local / Sport / Business / Entertainment(?) / Politics, Tech, even Science!

It's doubtless fair to assume folk will prefer to avoid spending any time in flying petri dishes while panic levels remain high. This will surely create an ongoing income problem for the travel industry, making it easy to believe the drops since 20th February may simply be early warning of trouble.

If this proves the case, weakness against IAG below 394p risks proving messy, signalling the risk of further reversal to 334p. If broken, secondary calculates down at 222p.

Despite being a truly shambolic reversal suggestion - a 50% reduction on current - this risks not being the end of the story as "bottom" works out at somewhere between 100p and 138p ultimately.
 
At present, there is very little point in drawing a trend line to map the pace of reversals. Were we to do so, about the best we could suggest is of moves above 550p signalling the drop has slowed.

In reality, any recovery is liable to prove sharp and vivid, if someone announces they've knocked together a cure for COVID-19 in their garden shed!

But to be fair, we'd tend to believe above just 462p will give sufficient early warning for price recovery.

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.