Can the EasyJet share price recover from last week’s sell-off?

The EasyJet share price reversed course lower towards the end of last week. But does the decline continue, or will this week see a return of the rally?

EasyJet plc (LON: EZJ) lost 4% on Friday, closing out the week at 846.40p.

After a strong start in the first three days, EZJ turned sharply lower in the final two days of last week. Although, despite retreating 6.4% from Thursday’s 903.40p high, the Easyjet share price managed to return 6.4% over the five trading days.

However, like rival IAG, shares in the budget airline have hardly taken off in 2021. Friday’s closing price shows an increase of just 0.6% from the January 4th opening trade of 640.50p.

That being said, recent developments should bode well for the share price. Last week the UK announced that excluding the french, fully-vaccinated travellers from Europe will no longer have to quarantine upon arrival.

“Passengers arriving from amber countries who have been fully vaccinated in Europe (EU Member States, European Free Trade Association countries and the European microstate countries of Andorra, Monaco and Vatican City) and the USA will not have to quarantine when entering England,” 

UK Department for Transport

Furthermore, the stock is well like by brokers. Of the 23 recommendations given to ShareCast, 12 rate EZJ as a strong buy. Moreover, Credit Suisse has recently reiterated its outperform rating and increased the price target to 1,200p.

However, Friday’s decline has forced the EasyJet share price below the 200-day moving average. And the last time this happened, the stock lost a further 10% in the three days that followed.

So can we expect a similar decline this time around?

EZJ price forecast

looking at the daily chart, we see that after reaching May’s 1,095p high, the EasyJet share price has been trending lower. However, in the last two weeks, EZJ has reversed some of the decline, gaining more than 12% from the 19th of July low at 753p

As long as EasyJet remains below the 200 DMA at 865.40p, the bears will target the trend line support at 810p. And should that support give way, an extension towards July’s low looks likely.

On the other hand, if EZJ closes above 865.40p, a descending trend line at 921p beckons. The appearance of the 50 DMA at 920.10p adds to this confluent level of resistance. On that basis, a clearance of 921p would be an extremely positive development for the bulls, clearing the path to 1,000p.

EasyJet share price chart (Daily)

Easyjet share price

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