It’s been a tough year for the tourism industry as a whole, and cruise line operators have struggled more than most. Although, there were signs the tide was turning for the Carnival share price, and CCL had climbed more than 25% since the 20th of July. However, since then, the stock has turned lower and could be on the verge of breaking down.
Carnival Plc (LSE: CCL), has had a challenging time over the last 18 months. Yesterday’s close of 1,440p is 70% lower than the January 2020 high of 3,728p. This is particularly concerning for shareholders considering CCL was firmly in a bear market at the start of 2020. In fact, the Carnival share price reached an all-time high of 5,435p back in December 2017 and has been trending lower ever since.
Things had been starting to look up for the world’s largest operator of cruise ships in recent months. A gradual re-opening of economies and travel had instilled some confidence back into the tourism industry. As a result, the share price had gained more than 40% since January’s low and more than 158% since the darkest depths of the pandemic in March 2020.
Although recently, the delta-variant covid strain has reared its ugly head and forced investors to reassess their exposure to cruise lines, aviation and tourism-related companies. This has led to CCL paring recent gains and turning lower, beneath the 200-day moving average.
Following the 33% drop from June’s high, the Carnival share price has trended higher in a bear flag pattern. Last week, the shares were changing hands at the top end of the flag, around 2,560p. However, yesterday’s low at 1,454p was bang on the lower edge. Furthermore, yesterday the shares finished the day below the 200 DMA at 1,493.30p for the second day running. I would consider this confirmation of the reversal and predict more losses may follow.
If the price breaks down out of the flag, a logical target for the bears is last months low at 1,259p. However, if CCL recovers the 200 DMA today, it might trigger another change in direction. In this event, the top end of the pattern is the first objective. And if that is surpassed, 1,700 looks achievable.
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