At the Copa, Is It Takeoff or Landing?

I found several 'interesting' things on this airline's charts.

Copa Holdings (CPA) is a leading Latin American provider of airline passenger and cargo services. The company was upgraded to an "overweight" rating by a sell-side firm Friday so a fresh look at the charts and indicators is worthwhile.

In the daily bar chart of CPA, below, we can see that the shares have held the $66-$64 area a number of times. CPA has crisscrossed the 50-day and 200-day moving averages several times in the past 12 months. I find it "interesting" that the tops and bottoms on this chart have been quick-turning affairs.

Trading volume has increased since November and that too is "interesting." Typically volume decreases in top patterns from left to right -- the biggest volume happens early in a top. In bottoms we often see volume increase through the pattern. Has CPA been making a bottom or a top? The On-Balance-Volume (OBV) line has weakened since February.

The 12-day price momentum study shows a higher low from March to May even though prices made equal lows. This is a bullish divergence and could prompt a rebound. 

 

In the weekly Japanese candlestick chart of CPA, below, we see a bearish picture. Prices have been stuck in a lengthy sideways pattern but the key is what the indicators have been doing. Dips in the $70-$60 area have been bought but the OBV line has turned weak in the past four months.

 

The MACD oscillator has declined from early 2021 telling us that the trend-strength has weakened.  

 

 

In this daily Point and Figure chart of CPA, below, we can see a nearby downside price target of $64. 

 

 

 

In this weekly Point and Figure chart of CPA, below, we can see that the software is projecting a potential downside price objective of $46. 

 

 

Bottom-line strategy: I pay attention to what fundamental analysts are saying but I don't ignore the power of charts and technical indicators. CPA could bounce for a few days or more but the risk is a break of $64 and still further declines. Avoid the long side of CPA for now.

 

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