The IAG share price continued lower on Friday, following the UK government’s decision to tighten travel restrictions ahead of the holiday season.
International Consolidated Airlines Group (IAG) finished Friday’s trading session at 196.34p, down 1.84p (-0.93%).
The company owns British Airways, Iberia, and Air Lingus. Therefore, the IAG share price has been sensitive to the return of European travel in the wake of the Covid-19 pandemic.
Clearly, 2020 was a dreadful year for airlines in general. IAG declined over -80% between February and September of last year. However, a recent increase in business travel had helped the shares gain +155% from its October low of 89.76p.
On May 17th, the UK government opened the airways for tourists. This was great news for the struggling travel industry and came just ahead of their busiest time of year.
The UK would use a traffic-light system to rank the safety level of destination countries. Red countries would be considered high-risk, followed by Amber at medium, and green countries rated low risk.
On Thursday, Portugal’s ranking was changed from green to amber. Returning travellers would now be subject to a 10-day quarantine period upon arrival.
The news sent the IAG share price sharply lower by -5.36% on Thursday. Moreover, Friday’s loss has pushed the price to a dangerous technical level.
The 1-day chart shows that IAG briefly broke below the support of a rising trend line at 196.20p. The trend has been in place from the 2020 low at 133.76p. I would consider this trend an important support level.
The price did manage to recover the trend by the close and finished just above the important barrier. If the price closes below the trend line, it can target the March 22nd low of 174.10p. A deeper decline takes the price to the January high at 166.30p.
However, if the price remains above the support, it may target a descending trend line at 209p. The trend from the March high is the first level of resistance on the upside. A break of this level would open the door to 220p.
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