Will IAG ascend to a new flight level?

We last reviewed International Consolidated Airlines Group SA (LSE:IAG) last August and in the period since the share price has reached our primary, secondary, and even third-level targets.

It even exceeded our third-level target, perhaps giving some considerable hope for the future.

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It’s perhaps worth pondering a few truisms from the stock market first, especially as IAG is managing to make two contradictory statements true at once with a third thrown in for good measure and confusion.

The first issue occurs when we review the immediate picture on the chart. IAG has enjoyed a nice uptrend since November last year, but earlier this month it broke the uptrend and is now experiencing “lower low” movements, creating a situation where weakness continuing below 321p is liable to promote reversals to an initial 299p with our secondary, if broken, at a bottom ideally just above 276p.

This would certainly provide an ideal level for a bounce, although there is always the risk of the share simply exhibiting further weakness. After all, in the market place, few things are as dangerous as trying to catch a “safe” bottom when loss of confidence in a share price makes it very easy for sentiment to influence folks’ decision-making, with the result that a downhill path can become a bad habit.

Visually, in the case of IAG, we’d hope to see our initial target level of 299p to provide a “bottom” due to previous behaviour indicating that this price level means something to the market. This scenario is certainly one for the brave, although it does afford employing a tight stop loss.

Source: Trends and Targets. Past performance is not a guide to future performance.

However, there’s another movement earlier in February worth weaving into our thoughts. The share price somehow managed to define a downtrend since the pre-pandemic high of 2020, creating a situation where any movement now above the blue downtrend (currently 361p) is liable to prove quite useful.

It introduces the potential of a rise to an initial 457p with our longer-term secondary, if bettered, calculating at a distant but viable-looking 579p, should the share price manage above our initial target. This scenario is made more fascinating due to the market belatedly noticing the completely artificial green line on the chart. For some reason, when the price surged to 368p in February, the market eventually noticed the prior high of 361p achieved in 2020, deciding that this would make a perfect “glass ceiling” level and forcing a stall in the share price increase.

We are certainly fascinated at the coincidence of both the green and blue lines creating what passes for a safe trigger level. As a result, we suspect this will deserve some attention in the weeks/days ahead, just in case the airline decides to ascend to a new flight level. It certainly starts to appear as though IAG will be worth keeping an eye on.

Source: Trends and Targets. Past performance is not a guide to future performance.