Interactive Investor

What this share needs to escape the danger zone and fly

5th April 2017 10:50

Alistair Strang from Trends and Targets

Flybe (LSE:FLYB)

We last looked at Flybe last October and speculated a bottom of 30p which, if broken, allowed a hard landing at 16p or so.

Thankfully, the 30p runway presence proved devastatingly accurate and the price has glided upward since.

Of course, in an historical context, this should read "glided with lead wings" as the share bounced to just above 50p and has been taxiing around uselessly since.

Currently, the situation near-term is it needs better than 46p to once again signal strength to an initial 50p, but the secondary at 63p makes quite a lot of sense.

One feature of trend lines is shown on the chart below - the dashed blue one and the solid blue one.

Both squiggles date back to 2011 and, while the original trend was 'proven' with repeated bonks against the line, the current incarceration with just a single touch may seem a bit silly, but we're inclined to take this sort of thing seriously.

The issue is trends change and, while the prior dashed trend proved quite intransigent for six years, the current iteration may not and it results in a situation where closure above this solid blue trend line is liable to provide some sharp upward entertainment.

For this reason, we've pencilled something in the 70s as it could move pretty sharply in the face of positive news.

For now, though, it's in a danger zone where movement below 36p is liable to provide 30p again with secondary 16.5p.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

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