The EasyJet share price nose-dived yesterday as the FTSE 100 sunk to its worst trading day in 9 months. Will today’s earnings make matters worse for EZJ?
EasyJet plc (LON: EZJ) slid -6.62% to 770.0p yesterday, as pandemic worries rattled the UK shares market.
It was a bad day all around for stock markets. Global indices continue to sink further into the red as investors grapple with the double-threat of runaway inflation and a resurgent covid-19. Tourism and travel-related shares felt the pain more than most.
Easyjet Cruise operator, Carnival plc, was slammed -8.20%, and British Airways owner, International Consolidated Airlines Group, declined -5.23%.
The EasyJet share price is more than 40% below its May 1,095p high. Therefore, investors will be desperately hoping the budget airline provides good news later today.
Analyst’s forecast EZJ will reveal £610m revenue in the second quarter, increasing on Q1’s £240m.
However, what will be key, is the forward guidance. Investors will be paying close attention to the company’s prediction for Q3. Especially in light of the recent surge in infections.
The daily chart shows the momentum has reversed sharply lower over the last two weeks. The recent sell-off has triggered several negative signals for the EasyJet share price.
Firstly, EZJ is now trading below the 50, and 100-day moving averages. Furthermore, the 50 DMA at 951.30p has completed a bearish crossover of the 100 at 974.0p. Secondly, EasyJet has broken down from a bull flag formation, and the resulting extension lower has forced the price below the key 200 DMA at 850.70p.
This puts the price on a path to the next significant support level. This is seen at 686.0p, where a rising trend line from the August high links low points from December 2020 and January this year.
Beyond this point, a meaningful long-term uptrend at 515.0p should provide a robust area of support. Considering the negativity roiling markets, this appears a viable possibility.
As long as the price remains below the 200 DMA at 850.7p, it should trade with a negative bias. However, a close above 850.70p will invalidate the bearish outlook.
Follow Elliott on Twitter.
