Carnival, a leisure travel company, has reported its earnings for its latest quarter, and it lost $2 billion. The company was affected by the COVID-19 travel restrictions heavily and now prepares for the comeback in the travel industry.
It already said that booking for the 2022 season are above the 2019 level, but it failed to say when the company will stop losing money. Investors were optimistic with Carnival during the pandemic, as they bought the lows, just as they did with the companies active in the airline industry.
As such, Carnival stock price bounced from its lows in April 2022 and tripled over the course of one year. Carnival is up 26.78% this year and now the stock price tests a major dynamic support level.
The technical picture looks constructive, but with one caveat – that the price does not close on a daily basis below $25. On such a move, the series of higher lows that started from the 2020 dive will be broken, which spells trouble for Carnival stock price.
Bulls may want to go on the long side with a stop on a close below $25 and targeting a new higher high. Bears, on the other hand, may want to wait for a close below $25 before going short with a stop at the most recent high and a take profit level derived from a risk-reward ratio of 1:2.
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