Technical Analysis Of AirAsia Berhad

February 1 2019

Wow looking at the date of the previous entry in this page, it has been more than 1 year since I look at this stock's technical. The last time was on January 30 2018.

A little more than a year.

At that time this stock was flying high and was the darling of the Malaysian stock market.

After the loss of BN in the general election back in May 2018, the stock has suffered dramatically along with many other government related stock. Malaysians saw how Tony Fernandez apologized for supporting the then ruling coalition after the general election.

The stock has not been able to go back to its former glory yet.

Let's take a look at the stock chart and see what we can learn from it.

I'll start off with the weekly chart first then we will zoom into the daily chart. That way we will have the big picture first.

The above is the weekly chart of Airasia. I'm using investing.com's chart. And I have come to understand they do not reflect actual chart if there are dividends announced. If there are irregularities do let me know.

Looking at the weekly chart, there are a bunch of technical knowledge that we can learn.

The stock had a weekly ascending triangle breakout. It met its measured move target very nicely and then a weekly topping tail formed to give investors a hint that the stock was topping out.

Sometimes a basic knowledge of Japanese Candlestick really does pay off its weight in gold.

There is a slight gap down after the May 9 2018 election. But do note that the stock was already in a downtrend even before the election came.

This is a testament that stocks actually top of and start a new downtrend before any events happen. Price reflects investors optimism about a stock.

Around October 2018, the stock broke down from its long term support.

It found support from its lows in early 2017 and bounce up higher but is now finding it difficult to overcome the massive resistance overhead.

If you remember from technical lessons:

  • Previous support once broken becomes a new resistance.

Which is why AirAsia is struggling to move higher.

One silver lining is that the stock has broken above a weekly downtrend line. This shows that it does want to move higher and forget its greyish past.

With that in mind, let us have a look at the daily chart of this stock.

The chart above is the daily chart of AirAsia. It has managed to go back above its 20 MA and 50 MA but the acid test of whether a stock is healthy or not in the long term still lies in the 200 MA.

It is still below this golden standard of what a vibrant stock should be.

The previous run up in Nov 2018 might have help to absorb supply. Which is why the stock traded sideways this time as it approaches the 200 MA.

But still, the 200 MA is giving this stock some trouble.

The place to look at now is the box that I have drawn. This will be crucial. If AirAsia can stay above this box and go back above the 200 MA then it can move higher although in a wavy pattern. Up and down and up an down because of the amount of resistance there in the past.

But that's ok as it might give smart traders a place to enter and exit following the wave like pattern as it rises.

If the box does not hold, the uptrend line I have drawn might be a last line of defense for the bullish camp.

Hope this analysis helps.

January 30 2018

AirAsia has been growing from strength to strength and recently made a new all time high. Will this stock continue to soar higher?

I'm sure Tony Fernandez is a very happy man right now. A mini Jeff Bezos of Malaysia, he has been able to take a company in a very difficult industry to historic highs.

The chart above is the daily chart of AirAsia.

The stock broke above a downtrend line, broke above a consolidation box and soared higher. The run up since December 2017 has been really fantastic.

Whenever a stock runs up too fast, it is a good idea to start thinking whether it will go back down. As traders and investors, we have to be realistic. For that, we need to look at support areas.

I have highlighted two immediate support areas in the chart above.

If AirAsia manages to stay above support 1, then the stock will not correct by going down. It might trade sideways a bit before going higher.

If it breaks support 1, your attention should go to support 2.

Support areas are good areas for traders to take profits once broken. 

Let's move in now to the realm of investors.

As always, investors should have a look at the weekly chart of their stock. As you can see, the stock is in a very nice weekly uptrend. It just broke out of a weekly ascending triangle and therefore the investor should remain bullish in the stock long term.

The top of the ascending triangle will act as a strong support in the event of a correction. That is a place for possible "buy the dips" scenario.

AirAsia has met its ascending triangle target. So some correction is to be expected.

Weekly charts always give lots of benefit to those who study them. Notice the two times that AirAsia broke a downtrend line? What happened after that was a nice bull run up in AirAsia.

The breaking of long term trend lines can often signify a trend change. Those who are observant will be able to profit from it.

When I look at the monthly chart of AirAsia above, I begin to realize why I was more bullish on this stock than AirAsia X. Compared, to AirAsia X, its mother's chart was better looking. It had already started a nice uptrend and went back near an old high.

Last year, Air Asia was also forming a monthly reverse head and shoulders pattern. The stock's share price had a "V" shape recovery.

This is a bullish reversal pattern and can hint of more gains to come for AirAsia.

I have drawn the reverse head and shoulders target on the chart. While this might sound impossible, as long as AirAsia continues its daily uptrend, it is achievable. There is ample support below and therefore, the path of least resistance now is up.

I just want to show you the weekly chart of Airlines. As you can see, it is not only AirAsia that is in an uptrend. Airlines all over the world are also benefiting from a better world economy.

As more and more people travel around the world, airline companies have more customers which in turn help their bottom line. This is in line with the rise of Luxury Hotel's stock prices. Stocks such as Hilton, Hyatt and Marriott have benefited from growing wealth and a travel boom.

You can read about the intermarket relationship of Luxury Hotels in a recent article I have written.

How Hilton, Hyatt And Marriott Points To Growing Wealth And Economy

Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com

Charts with the investing.com logo are courtesy of Investing.com powered by Trading View

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