IAG share price technical analysis: worrying pattern forms

IAG (LON: IAG) share price has been in a slow recovery mode in the past few weeks as investors assess the recovery of the aviation sector. The stock jumped to a high of 166.95p in June, up from 127.80p in March. It is about 9.8% below the highest level this year.

International Airlines Group is doing well

IAG and other airline companies are doing well as global travel bounces back. With inflation in key countries falling, demand for aviation has jumped. And analysts believe that most airlines will continue bouncing back to pre-pandemic levels.

A report published this month by IATA showed that traffic in May jumped by 39.1% in May compared to the same time last year. Global traffic has jumped to 96.1% of May 2019 levels. International traffic rose by 40.9% while the total industry load factor rose to 81.8%. The report added:

Therefore, there is a likelihood that IAG and other companies will do well during the busy travel season. Most importantly, disruptions this summer will be much lower than what happened last year.

The next important catalyst for the IAG share price will be the upcoming earnings, which is scheduled for July 28. These results are expected to show that the company’s revenue and profitability did well in the second quarter.

In its most recent quarter, the company said that its total revenue jumped from €3.4 billion in 2022 to over €5.8 billion in 2023. Its loss after tax dropped to €87 million from the previous €787 million.

IAG chart by TradingView

The daily chart shows that the IAG stock price has been in a strong bullish trend in the past few months. Along the way, the shares have formed a rising wedge pattern, which is shown in black. In price action analysis, this pattern is usually a bearish sign. It has now moved below the lower side of the wedge. The stock has also moved slightly below the 50-day moving average.

Therefore, the shares will likely continue falling as sellers target the next key support level at 150p. A move above the lower side of the wedge pattern will invalidate the bearish view.