It can be tough to invest in an airline. Australian airlines have to fight competition from overseas airlines (which are often owned by governments with deep pockets), fluctuating fuel prices and currencies, workers unions, and changing consumer demand. However, recent cost cutting and more attractive fuel prices, amongst other things, has seen the share price of Qantas (QAN) do remarkably well.

Qantas has had a stellar run in the last few years, heading from $1, up towards $6. Across late June – early July, Qantas formed a little triple top (circled) on the weekly chart before falling away. The shares then rallied higher again.  However after going to a new high two weeks ago, the stock was sold down straight away. Volume had also been decreasing as Qantas went from $4 to $6, which indicates a lack of conviction. We may be seeing a top in place here and we could see it fall back towards support near $4.15. That level also corresponds to the 61.8% Fibonnaci retracement of the 2014 – 2017 rally.

Michael Gable is managing director of Fairmont Equities.

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