United Airlines stock analysis: Is a turnaround possible?
The charts suggest United Airlines could consolidate in the short term.
United Airlines released third-quarter numbers on 19 October that were better than analysts’ expectations as compiled by Refinitiv, CNBC reported. The airlines reported $7.75bn (£5.61bn) in sales, down 32% from the same quarter in 2019 but ahead of analyst estimates of $7.64bn. The company’s adjusted net loss of $1.02 per share topped the $1.67 per share loss estimated by analysts.
United Airlines’ CEO, Scott Kirby, said: “The recovery was delayed by the Delta variant, but the United team remains focused on our long-term vision, and not getting sidetracked by near-term volatility, meaning we’re solidly on track to achieve the targets we set for 2022.”
United expects capacity in the fourth quarter of this year to be 23% lower than the corresponding quarter in 2019. Higher fuel prices may play spoilsport because the airline projects an average cost of $2.39 a gallon, almost 12% up on the $2.14 a gallon it paid in the third quarter. United expects international growth to boost its 2022 capacity by 5% versus 2019 levels.
According to Yahoo Finance, the consensus analyst share price target for United Airlines is $59.58. Will United Airlines’ stock go up and reach its target objective? What do the charts suggest? Read our UAL stock analysis to find out.
United Airlines share price technical analysis: weekly chart
United Airlines’ stock price fell off the cliff from $90.01 in January 2020 to $17.77 in March 2020. Thereafter, the recovery from the lows hit a wall at the 61.8% Fibonacci retracement level of $62.46 in March of this year.
This shows that sentiment remains negative and traders may be liquidating their positions on rallies. Both moving averages are flattening out and the relative strength index (RSI) is below the midpoint, suggesting a minor advantage to bears.
A break and close below $42.42 could tilt the equilibrium in favour of the bears. The stock could then slide to $39.04 and later to $32.87.
Alternatively, a break above $52.24 could clear the path for an up-move to $63.47. The bulls will have to push and sustain the price above this resistance to signal that the correction has ended.
United Airlines share price technical analysis: daily chart
The bulls pushed United Airlines’ stock price above the resistance line of the descending triangle pattern on 23 September, invalidating the setup. The bears tried to pull the price back into the triangle but the bulls defended the breakout level aggressively.
The stock rebounded sharply on 1 October but the bulls could not clear the overhead hurdle at the 61.8% Fibonacci retracement level at $53.51. This shows that bears continue to sell on rallies.
The bears are currently attempting to pull the price below the 50-day simple moving average. If that happens, the stock may gradually drift down to the strong support level at $42.42.
Conversely, if the price rebounds off the current level, the bulls will again try to propel the stock above the overhead resistance at $53.51. Such a move could open the doors for a rally to $60.38.
United Airlines stock: Buy or sell at these levels?
United Airlines’ share price analysis shows that the trend remains negative and traders are selling on rallies. If the price rebounds off the current level, the stock may rally to $53.51 where bears are likely to pose a stiff challenge. On the downside, $42.42 is the strong support level to watch out for.
The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.