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After falling from August to October, Boeing stock (BA) appears to be improving. The stock was filtered in several of the StockCharts predefined scans, one such scan being Breakaway Gap Ups.
BA stock gapped up on increased demand for its aircraft. A recent Barron’s report stated that China could resume purchases of the 737 MAX, Emirates plans to purchase $52 billion worth of Boeing aircraft, and SunExpress plans to purchase about 90 737 MAX aircraft.
Let’s take a closer look at the stock charts of BA, starting with the 10-year monthly chart (see below), which gives us a glimpse at Boeing’s stock history.
CHART 1: MONTHLY CHART OF BOEING STOCK.
COVID-19 wasn’t kind to BA’s stock price. The stock price fell to a low of around $90. Since then, the stock has been moving up and down within a relatively wide range. Will this positive news be the catalyst to take the stock to its $438 high?
Let’s now shift to the 5-year weekly chart of BA (see chart below).
CHART 2: WEEKLY CHART OF BOEING STOCK. After a double-bottom, BA stock broke out above the resistance level, traded within a range for about six months, and broke above the range, but failed to follow through.Chart source: StockCharts.com. For educational purposes.
On the weekly chart of BA stock, you can identify the double bottom in 2022. The stock price broke through its resistance level (the highest point between the troughs) in November 2022. This resistance would now be the support level, which came close to being tested on October 23, 2023. The price target of the double bottom pattern would be the distance from the resistance breakout to the trough lows. Using the percentage change annotation tool, that comes out to about 29%. If you extend the 29% to 173, which is the breakout level, it gives you a price target of around $223.
BA’s stock price was moving within a $195 and $220 range for about six months. In July, it broke above the range, but then pulled back and went below it. BA’s stock price came close to retesting the double-bottom breakout resistance support level. The stock price has, since then, bounced back higher, although not quite above the $195 to $220 range.
Let’s turn to the daily chart.
CHART 3: DAILY CHART OF BOEING STOCK. After gapping up, the stock price is getting close to overhead resistance. Will it break through it or fall?Chart source: StockCharts.com. For educational purposes.
Volume is higher on the breakaway gap, which is encouraging. The StockCharts Technical Rank (SCTR) score is climbing higher, and its relative strength index (RSI) is approaching the 70 level. A cross above 70 would put the stock in overbought territory.
The Takeaway
While BA stock received encouraging news that was behind the gap up in price, it’s a good idea to keep an eye on the chart of BA stock.
Two scenarios could play out.
- The stock pulls back. With the RSI approaching overbought territory and overhead resistance of the 100- and 200-day SMAs not too far away, there’s a chance the stock price could pull back, and the price gap could get filled. If a reversal takes place after the pullback and there’s enough momentum behind it to push the stock price higher, an ideal entry point would be around $198, with a stop no lower than $197. The first price target would be the 200-day SMA.
- The stock could break through resistance and continue higher. All price gaps don’t get filled, so the stock price may break through the overhead resistance from its 100- and 200-day SMAs and continue higher to potentially around $229. The SCTR score is close to 70. A cross above 70, as the price breaks through its resistance, could see BA’s stock price explode to the upside. If this scenario plays out, assuming the stock chart looks like it’s looking now, an ideal entry point would be just above the 100-day SMA with a tight stop loss. Why a tight stop? If the stock fails to push through, then it could fall drastically.
Add BA to your ChartLists and set price alerts of crossing its overhead resistance or below today’s low. This could be a looming trading opportunity you don’t want to miss.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.