Boeing (BA) Technical Analysis 26/01/2020
Boeing (26/01/2020 technical analysis)
This weekend I present an analysis the BA price chart and also my opinion on what to expect from here on.
BA, Weekly Chart Analysis (26/01/2020)
Analyzing the price chart we can see that the prices stopped their very steep rise just after the beginning of the 2018 when they entered into a consolidation phase nearly the whole year to begin again to rise based on strong fundamentals and growth expectation for this solid company considered by many one of the best engineering company in USA and the world.
After breaking out from the consolidation phase the prices started to move upward again until the chain of negative events began which produced a great deal of disappointment in the company and precipitation of the prices back to the consolidation zone established during 2018.
Figure 1 shows the consolidation range between what appears to be a strong support level about 300$ and a relatively strong resistance established around 375$.
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| Figure 1: weekly price chart of BA (from www.eToro.com) |
The stock entered into a new consolidation range from March of the last year until now.
The very negative sentiment that was created from the chain of events which lead by end of the end to the firing of the companies CEO was not able to break the 300$ strong support so far.
In my opinion most of the negative news for the stock is more or less priced in, same goes for most of the downgrades, so I would expect that the prices might try to test for the last time the strong support of 300$ in the next weeks and from there, if there are no new negative information, I would expect that a temporary bottom will be established.
The shape of the last candle seems to indicate that once the price got close to 300$ buyers came in and began to buy forcing the shorts to begin covering.
The RSI analysis shows that the stock actually entered into a consolidation pattern by end of 2018 when it peaked well above 80 and then began to trend lower for about two year.
Once the RSI breaks above the trend line I drew, I would consider that a possible bottom for the stock and if the prices break above the strong resistance at about 375$, I would consider that the BA broke out of the consolidation pattern and was ready to restart its trend higher.
BA, Daily Chart Analysis (26/01/2020)
On the daily chart we can observe that the prices formed a temporary triangle pattern during the last year of trading. If the support (base of the triangle) holds and the prices are able to break the first resistance level (the descending triangle line), I would consider that a buying opportunity and take profit a bit before the levels of 380$ when the prices will hit the strong resistance.
In the short period I believe that the stock will struggle to break above the price of 375$ but it could bounce off this level several times during the next months until a good news such as the certification of the 737 Max to fly again was confirmed.
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| Figure 2: Daily chart of BA (Boeing) |
Conclusion
The analysis of the weekly and daily charts as well as their RSI indicators, show that the 300$ support hold so far and seems to be a strong support.If it holds during the coming weeks, I would expect that a temporary bottom was established for this stock and after a new consolidation phase the stock will resume its trend upward again.
For the coming weeks it's recommended to be careful also in light of the latest events about the virus outbreak in China that will hit the transportation industry to a certain extent, thus indirectly BA as well.
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The graphs and prices shown in this analysis were taken using as a source www.etoro.com, the platform I am using for my trading as DanieleTrader.
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