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EasyJet (EZJ) Shares Have Risen 7.54% in One Week. Will the Rally Continue?

Simon Mugo trader
Updated 18 Mar 2022

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Key points:

  • EasyJet shares have risen 7.54% in one week and could keep rising.
  • The budget airline has multiple tailwinds that could fuel the rally higher.
  • However, analysts are not optimistic about the much bigger airlines.

The EasyJet plc (LON: EZJ) share price has risen 7.54% in one week, leaving many asking if the rally will continue or if the trend will reverse.

The budget airline has benefitted from the recent surge in passenger numbers after lifting most COVID-19 travel restrictions, such as pre-departure testing for vaccinated passengers.

Also read: The Best Travel Stocks to Buy Right Now.

The airline reported a significant improvement in passenger numbers and revenues during the last quarter of 2021. It generated £805 million in revenues, marking a significant improvement to the £165 million generated in Q4 2020.

EasyJet is also set to benefit significantly from rejoining the FTSE 100 index after being dropped when the COVID-19 pandemic struck in March 2020, leading to a massive crash in its share price from 1,270p in February 2020 to a low of 400p on 3 April.

Rejoining the FTSE 100 index gives EasyJet access to a larger pool of institutional investors from passive investing funds that have to acquire its shares to ensure that their portfolios track the entire index.

The global airline industry is recovering amid pent up demand from travellers who spent two years in multiple lockdowns unable to travel.

The airline anticipates demand for tickets to peak in the summer driven by people on vacation. For many people, it will be the first time they can travel to their preferred vacation destinations without having to quarantine.

Market analysts are also predicting a sharp surge in demand for air travel, as evidenced by the upgrading of WizzAir to neutral by analysts at Exane BNP Paribas.

However, analysts are not optimistic about all airlines since the BNP Paribas analysts downgraded Lufthansa airline to underperform from neutral.

Luckily for EasyJet, its status as a budge airline means that it serves the most significant portion of travellers, which is it might do better than its bigger peers due to its much lower ticket prices.

The soaring inflation in the UK, Europe and globally has left many consumers with less money to spend on discretionary items such as travel, which might increase the number of travellers downgrading their preferred airlines to EasyJet.

A cocktail of favourable tailwinds could fuel a more significant rally in the airline’s share price; hence, the rally is likely to continue from current levels.

As a trader, I would look to buy EZJ shares break above the 563p resistance level, which would indicate that the bullish trend was about to continue. However, if EZJ shares fall below the 480p support level, the bullish thesis will be invalidated.

*This is not investment advice. Always do your due diligence before making investment decisions.

EasyJet share price.

EasyJet share price 18-03-2022
Source: Tradingview

EasyJet shares have risen 7.54% in one week. Can the rally continue?

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading