Right Side of The Trade Reviews by MoneyProphet
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Wed, Apr. 29, 2020
Air Canada Review – AC.TO TSX
Today I’ll be reviewing stock ticker AC.TO (Air Canada).
Airline stocks continue to price higher over the past few weeks amid Coronavirus uncertainties and major decreases in the amount of people flying.
Air Canada plans to rehire many of their employees with the help of the federal government wage subsidy program. Air Canada says up to 16000 employees may return, with the wage subsidy covering from March 15 to at least June 6, as per CBC News.
Company management will be seeing reduced pay, as well as Air Canada ceasing to buy back any of its shares until operations are back to normal. These are good signs that company management are taking the necessary steps to conserve cash during the pandemic.
Let’s get to the charts.
In this weekly timeframe you’ll see the stock has been on a steady uptrend staying at or above the 50D moving average. After the oversold low around $10 it has been on a reversal. The 5D moving average (MA, for short) and 10D MA are both curling up. Indicating the overall trend has changed. RSI had dipped to a staggeringly low point of 9.53 – the lowest the stock has ever seen. That is considered an extremely low RSI level, and a great buying opportunity for astute investors. The RSI level has only returned to the low level of 36, implying this stock has a lot of room left to go up. It is trading on a steady support trendline and all but the lower indicator (which is providing a fading bearish signal pushing towards bullish, for me) – are showing bullish signs.
In this daily timeframe you will see that the RSI level is much higher, approaching the 70 level. This is indicating a potential slow down in upward price movement and is getting close to technically overbought levels. You will notice the increase in buying volume over the past week or so. The steady uptrend continues. The moving averages are even more predominant in this timeframe with the addition of the 50D MA beginning to flatten. Price was unable to break the $22.85 high of the major bearish engulfing sell-off candle of March 16. However, it did best the last recent oversold candle of April 9, pushing price towards the gap fill at $22.85. I foresee a bit of sell-off and cool-off period with RSI lowering, before the push that is needed to break $22.85. Following that, there isn’t much resistance into the $23 – $25 area.
I will remain bullish on Air Canada stock while it is in this defined uptrend. My indicators and chart will signal for me when the time comes to sell and get out, but that hasn’t happened yet. Times will remain tough and investors must be patient, but diligent with their overall picks, as markets are still shaky.
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Good luck and look forward to more Right Side of The Trade Reviews by MoneyProphet