Stock of the day: Lufthansa

We end this week with analysis on Lufthansa. This is a company in an industry that was severely hit during the pandemic: Airlines.

The first two months of this year were quite decent for this asset, the price was climbing higher. But then it all stopped when the price tested the ultimate resistance around 12.6 EUR. That was a crucial support in 2019 and a resistance in 2020, so we could have assumed then that it will be relevant in 2021. And it was. Buyers didn’t manage to break this level by the end of February and the price collapsed.

Looking at the big picture, we do have a head and shoulders pattern (blue rectangles), with the neckline which was already broken, so as a consequence – we get a legitimate sell signal. What’s more is the right shoulder of this pattern is a triangle formation (red lines), and of course the support of this pattern was also broken a few days ago.

Taking all this into account, it’s really hard to find anything positive on this chart. Sellers have a great technical situation which is promoting a further slide south. The negative sentiment stays with us, as long as the price is below the combination of the red and blue line.

The price coming back above those resistances will give us a buy signal, but chances of that happening are now limited.