The IAG share price nosedived yesterday as part of the overall sell-off of airline stocks. The stock dropped to 174p, which was the lowest level since February 22. Other major airline stocks that tumbled are EasyJet, Ryanair, and TUI.
What happened: The IAG stock fell by as much as 17% on Monday as investors reacted to the new travel restrictions in Europe. This is after countries like France and Germany announced new lockdowns to curtail the recent rise in cases. In Germany, the government will impose mandatory quarantines, which could have a negative impact on the sector.
Also, in the UK, the Defense Secretary said that the country will likely reopen to foreign leisure in May as planned. These new measures mean that the airline industry could continue to struggle in the near term ahead of the busy summer season.
Still, with countries ramping-up their vaccination drives, there is a possibility that the airline industry will not be as affected as most analysts fear.
A look at the four-hour chart shows that the retreat of the IAG share price was relatively easy to see. But I didn’t see it in my previous forecast.
The chart shows that the stock formed a double-top pattern at 221p. Its neckline was at 203.5p. While the price has pared back some of the losses made yesterday, it is still below the neckline. Therefore, in my view, the stock may continue rising as bulls attempt to move above the psychological level of 200p. This prediction will be invalidated if the shares move below yesterday’s low of 174p.
