IAG Share Price: Are We Headed for a Bear Market?

The IAG share price is down by a percentage point in today’s trading session, extending the streak of the bearish trend that started three days ago. The drop follows more than a month of a price rally, which started on October 3 and had seen IAG value surge by 57 per cent before the start of the week. 

The current drop comes amidst concerns about the rising cost of living, with the latest data showing UK’s inflation rate was at a 41-year high after the latest figures showed an 11 per cent surge in the consumer price index. The Office for Budget Responsibility also pointed it that they expected the inflation to erode real wages and reduce living standards by the highest margins since 1956. 

Although the data did not point directly to the IAG, the impact of the current inflation is likely to see the IAG share price affected in the future. This is despite the company posting positive results in the past few weeks, including revenue of over 16.6 billion euros in the first 9 months of the year and returning to profitability. As the aviation industry continues its recovery to its pre-pandemic levels, we may see customers cutting down their spending on travel, which will significantly impact the airline company and possibly reverse its recent milestones, including returning to profitability. 

IAG Share Price Forecast

Looking at the chart below, the IAG share price has been in a long-term downward trend for months and has traded within a descending channel for most of that time. In October, IAG share price hit the lower trend line of the descending, failing to break to the downside and starting a new bullish trend to the upper trend line, which has lasted since October 3. However, after hitting the upper trend line, the price again failed to move past the descending channel trend lines and instead reversed its course. 

Therefore, based on the above technical analysis observation, I expect the current IAG share price to continue falling for the next few trading sessions. There is a high likelihood we might see it dropping below the 120p price level. A move past 135 will invalidate my bearish analysis.

IAG Daily Chart