IAG (LON: IAG) share price has become very volatile after breaking the uptrend. Our analysis reveals that the potential formation of a bearish pattern can lead to a big drop below 100p. IAG stock is currently trading 20.9% below its YTD high of 173.5p.
On Monday, IAG shares turned green after a pullback at the end of last week. Till press time, the shares were up 1.46% and trading at 137.5p. Major UK shares also showed some recovery as the benchmark FTSE 100 index gained 85 points during today’s trading session.
Moody’s Revises IAG Outlook From Negative To Stable
Due to the ongoing pullback, IAG share price UK has wiped off its yearly gains. Even though the shares are still 9% up for the year, they were trading 38% above their yearly opening in February. Nevertheless, the price is still maintaining the bullish market structure that started in October.
The correction in IAG shares comes as a surprise to many, as traveling is coming back to normal after years of restrictions. Just a few weeks ago, Moody’s affirmed its corporate rating of International Consolidated Airlines Group as Ba2. The rating agency also revised its IAG outlook from negative to stable.
IAG Share Price Forms A Potential Cup & Handle Pattern
The inverted cup &handle pattern is considered a very bearish pattern in technical analysis. A look at the LON: IAG chart shows a potential formation of this pattern, as shown in the following chart. The measured target of this pattern is 82.4p, which is 40% below the current share price.
However, this bearish pattern only plays out if the neckline is broken. This makes the 127.8p level very critical. Another major confluence is the presence of the 200-day moving average at 128.52p. Therefore, a break of this level will make the IAG share price forecast very bearish. However, the December lows at 122.7p may act as major support.
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