The Carnival stock price is up +300% from its 2020 low. The cruise line operator may be on the verge of a breakout that could send the price even higher.
Carnival (NYSE: CCL) is the worlds largest cruise ship operator ahead of Royal Caribbean and Norwegian.
The cruise ship industry took a beating in 2020. The slowdown in demand as a consequence of the covid-19 pandemic crippled Carnival stock. However, CCL has enjoyed much smoother sailing in 2021 and recently printed a year high of $31.50.
For much of the last year, Carnival’s fleet has sat idled, but there is some optimism that ships may soon be back on the high seas. This has helped the Carnival stock price increase by over +50% since the start of the year.
Clearly the company’s financial situation has been severely stressed by the pandemic and will likely struggle under its large debt load for some years yet.
Having said that, markets are forward-looking. Moreover, bulls will point to pent-up future demand as a positive catalyst.
Regardless, of what may or may not happen, sometimes the price action provides the best trading set-ups.
The daily chart shows that the recent rally has reached the major resistance of a rising trend line at $31.59. This trend has been in place from the June 2020 high of $25.28.
Putting fundamentals to one side for a moment. If CCL pushes above this trend line, the price could extend 25% higher to $40.00. Bulls may look to take advantage of a close above the trend, placing a stop below $30.00.
Of course, considering the magnitude of this year’s rally, the price may falter here. On that basis, a failure to break resistance would lead to the price retreating to May’s $24.29 low.
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