Airasia re-testing its downtrend line

On July 28 & 31, Airasia has re-tested its recent low of RM1.28 made on July 14 & 17; making a marginally lower low of RM1.27 before re-bounding on last Friday (August 4). The downtrend line resistance is at RM1.37 & declining.

Some recent news may be positive for Airasia. Amongst them are:

1. Airasia may tie up with Tiger Air to bid for the KL-Singapore route;
2. Airasia is ordering additional aircrafts;
3. Airasia is targeting to carry 15 mil passengers in 2007; a 67%-increase from 9 mil projected in 2006; and
4. Malaysian Airlines is raising (instead of lowering) their airfares for domestic routes, thus posing less of a threat to Airasia.

A reversal of the current downtrend is deemed completed only if the share price rises above the RM1.37 level. In early trading this morning, the share price rose to a high of RM1.40 before drifting down to RM1.39 at 10.00 a.m. See the daily chart below for the price movement for the past few weeks.



















Chart: Airasia's daily chart as at August 4