IAG shares began the year with a rebound of more than 5 percent and hitting 1.8 euros, highs not seen since concerns about the omicron variant of coronavirus arose at the end of November.
In this way, the Iberia parent company put the bow towards the psychological level of 2 euros, driven by expectations that 2022 will be the year of recovery, as explained by Finanzas.com.
It is true that the entire airline industry started the year on a very good footing, following a recommendation to buy Lufthansa securities by Citi. Their arguments are similar to those used by the entire market. The new strain is more benign.
Although the level of contagion is high, it seems that “the effects of omicron are milder than other variants of the covid, a situation that relaxes the tension between the most cyclical values, especially the tourist ones, which rebound strongly this morning”, He said Diego Morin, IG analyst.
IAG, immune to news of canceled flights
As happened on Christmas Eve, the omicron expansion meant that US airlines had to cancel more than 5,000 flights in the first weekend of the year.
And as happened on that occasion, these news had no impact on the price of IAG. In fact, what experts appreciate is that the US market remains open for European airlines.
In fact, one of the arguments used by Citi to recommend Lufthansa it is the recovery of transatlantic travel.
These routes are important to the group. Not surprisingly, the long-haul business segment is concentrated here, which “has begun to show improvement,” he said. Ivan San Felix, Income 4 Bank analyst.
The frustrated purchase of Air Europa did not take its toll on the listing either, to the extent that failure was highly discounted. In addition, the group has an opportunity to strengthen itself in the European market with Vueling, as explained in Bloomberg Intelligence.
IAG accelerates the comeback
With this explosive start to the year, the price of IAG the psychological level of 2 euros is already in its sights.
Before the attack on these reference levels, the price action will have a stress test around 1.8 euros.
IAG is trying to confirm the double bottom pattern with which it was trying to close the year, a figure that has yet to be confirmed.
To certify it well, “it has to completely close the bearish gap, which should bring prices to the 1.8 euro area,” said the director of analysis of INVESTMENT and finance.com, Josep Codina.
“We must wait for the reaction of the demand around 1.80 and 1.90 euros, since in these points there is a lot of dispute between suppliers and applicants,” he agreed in his diagnosis Diego Morin.
The 2 euros of IAG, on the target
In this Monday’s session, in fact, IAG has already attacked 1.8 euros. If it ends up closing above, “the theoretical objective of the double bottom pattern that IAG has is practically the average of 200 sessions around 2 euros,” he said. Codina.
It is a very important area for the airline’s price, which would significantly improve its technical aspect.
“It would be placing itself again within a more lateral scenario and that to break it upwards it would have to exceed the area of 2.2 euros,” he stressed Codina.
Furthermore, any consolidation of the levels around 1.8-1.9 euros, “could be the beginning of the search for 2 euros, a level that coincides with the medium-term bearish guideline,” he said. Morin.
All in all, the danger has not yet been definitively abated, and if the news about the coronavirus turned more negative, downward pressures would return.
“The support zone that IAG I should not lose in any case it is 1.7 euros “, he said Codina. If this reference yields, the stock could cancel the double bottom figure and go back to looking for the area of the December lows, between 1.45 and 1.5 euros.