Hi Robert. I hope youāre having a good weekend.
RyanAir is an interesting one. Itās not a company that I follow and thus I hadnāt seen the chart. Obviously I have no idea whatās going to happen next but here are a few comments for what theyāre worth:
As you say it is a fairly well run and efficient company. Iāve flown with them but have mixed views about them mainly because I donāt think budget/low cost needs to equal bad customer service and I think their customer service is good a lot of the time but there are the high profile occasions when it isnāt (ie failing to give statutory refunds or compensation).
Having never looked at the chart I find it interesting. For example in July the price gapped down and dropped about 10% but then had an extended period of trading in a narrow channel. Youād probably expect a big gap and move would be followed by more volatility or a up or down trend. After a month moving sideways it then went into a pretty steady downtrend. Prior to the July gap down there had been a good 20% rise in the share price but depending where you draw the trendlines for that 16/3/2023 to 13/7/2023 rise the uptrend was showing signs of weakening in early July and had created a weak SR line at 108. Iāve drawn a solid yellow line where the price was testing the lower side of the rising trend. The July results were pretty good (above expectations) but the price gapped down and stayed down. Thus I donāt think you can simply say the results are X so the price should do Y. There clearly isnāt a strong correlation between what the price does (short term) and the results. Back in Nov 2022 the results didnāt meet expectations but the price rose then had a brief flat period and then a very strong rise before good results which resulted in a flat price. I am sure that there is a correlation between results and price but it isnāt an obvious simple one.
So looking at the current chart, the price dropped from the fairly stable 100 channel to circa 88 and arguably had a couple of days fairly flat at that price (solid purple line). I havenāt drawn it on the chart but there is a good SR level at $90 created between Jan and Apr 2023 and on multiple prior occasions. At the end of Oct 2023 the price had broken below $90 but held on to it (so not a convincing break but nevertheless it was below 90 for a few days).
There was very little to suggest a strong positive move and arguably only the one red candlestick before the rise that could be weakly argued to hint at a possible rise. That final red candlestick could be argued to break or at least test a descending trendline and the $90 level but it closed roughly at the previous open (and below 90) so definitely wasnāt very convincing. However, the next day was a big gap up and close green. The following day was a small gap up and closed green but with a big wick forming a hammer candlestick (sometimes bearish). The top of the wick was at $95.89 which was the low point of when it was in the 100 channel so it hadnāt even broken that resistance level and got back to the 100 channel. Thus gapping up two days in a row and green on both days was very positive but still meant that the results were a gamble. Personally if I was bullish about the results I would have bought at 90 but it would have been risky because the next major SR level below 90 is some distance so it could have dropped a lot. However, I would probably have been tempted at 90 because the travel sector has been fairly bullish this year and there were several indications that Ryanair were probably doing reasonably well. I am not sure that I would have bought the day before the results in the mid 90s because of the hammer candlestick and significant risk that it would drop back to 90 or below. However, from the chart, positive results could have resulted in either the price staying in a 90-95 channel, a 90-100 channel or back into the channel around 100 that it had after the July results. None of those were terribly exciting prospects thus not worth the risk (imo) the day before results with the price already just below 95.
As it turns out the price gapped up opening above 100 (so a strong move up) only to close red below 100. Thus a very strong gap up but a lot of selling to close red. Thus the rise since then is rather surprising. During the recent rise the price often opens below the previous close but then finishes green above the previous close. Thus rising closes. there has been one red candlestick but even closing red the closing price that day was above the previous close and had a wick and tail so was an indecision candlestick. If you ignore that single red candlestick the next two days were both green with rising closing values (but also lower opens). Then the price gapped up with strong green candlesticks with repeatedly higher closes (but again often opening down from the previous close).
The last two days the closing price has effectively been flat. It is possible that it will continue rising (like it did after the single red candlestick) but it looks to me more like its hit a strong resistance level. If you go back the current price is a significant resistance level from 2021/early 2022. It did break this price twice to go on to 125 but on both occasions (Nov 21 and Feb 22) dropped back. Thus if the price does continue to rise it will have strong resistance at 125 but I wouldnāt be surprised to see the price sit at the current level for a few days before deciding what to do or possibly dropping back to 112.
If there are projecting strong growth in passenger numbers then I suspect that will translate to a target price for funds but history suggests that it is difficult for us simple investors to translate results/forecasts into target prices for what will happen to the price. I wouldnāt be surprised to see the price test 125 some time in the near future but if it does I think there is a reasonable change of volatility before it rises to 125 and/or after it hits 125.
If it breaks 125 then it will be a very bullish move but I would have thought that there would be a lot of selling. A lot of people will be in profit and nervous that it is at an all time high and thus they donāt know where it will go. Thus significant potential for volatility. However, if you believe in the fundamentals and if they are projecting strong growth (I havenāt looked at the projections so donāt know how good they are) then taking a cautious approach there should be good opportunities to trade any volatility. The big two questions are whether it will break the 118 level to go to 125 and then whether it has the strength at some stage to break 125
