Breakout Alert: easyJet (EZJ)Trading Update Creates Catalyst for Breakout
easyJet released a market-beating trading update last week which has created the catalyst required for a major breakout.
The trading update, covering the quarter ended 31st Dec 2023, painted a positive picture of easyJet's financial performance and outlook. Despite facing headwinds from the conflict in the Middle East, the airline reported a narrower Q1 headline loss before tax of £126 million, an improvement from the £133 million loss in the same period last year.
Crucially, easyJet's strategic focus on disciplined capacity growth and a strong customer-centric approach appears to be resonating with investors. Passenger growth of 14% year-on-year and a 3% increase in Revenue per Seat (RPS) in Q1 contributed to the overall positive sentiment.
The shares gapped higher on the day of the trading update (24th Jan), taking prices into a key area of resistance created by the cluster of highs that formed during the first half of last year. Yesterday’s price action saw the shares break and close above the resistance zone – signalling that a major breakout is potentially underway.
easyJet (EZJ) Daily Candle Chart
Past performance is not a reliable indicator of future results
A Closer Look
Monitoring a breakout on a lower timeframe provides insights into its sustainability. On easyJet's hourly candle chart, a pattern of higher swing lows is emerging, suggesting that the market might be establishing the broken resistance as a new support level.
Traders should exercise caution against false breakouts. A close below the series of higher swing lows, bringing the market back below resistance on the hourly candle chart, would serve as an early warning signal.
easyJet (EZJ) Hourly Candle Chart
Past performance is not a reliable indicator of future results
Risk Management:
Those looking to take trades in easyJet should consider incorporating ATR into their stop placement as this will dynamically account for current levels of price volatility.
On easyJet’s corporate calendar we have a number of dates worth noting:
Wednesday, January 31st: easyJet Holidays Seminar
Thursday, February 8th: easyJet Annual Shareholders Meeting
Thursday, February 22nd: Dividend - 4.5000 GBX
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
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