Technical Analysis Of AirAsia Berhad

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

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Charts with the logo are courtesy of powered by Trading View

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