TheTrendLineInvestor

AAL - A Chart Requested With Manners

NASDAQ:AAL   AMERICAN AIRLS GROUP INC
I will start by saying that I believe manners are important. It is a shame that so many people have forgotten they exist.
I want to thank the requester of this chart, a complete stranger, for using his manners :)

Let's move on the the request for a chart of AAL.
Back in late 2013, AAL (the stock ) was just getting started. The stock created a double bottom in the first month. After that it was off to the races. All the green circles on this first uptrend line are places you could have began a position or added to your position. Notice the two red circles at the top of the uptrend line? Those are there because I would say that is where the downtrend begins.

The first red circle is the first time AAL "closed below" this "adjusted" uptrend line. It only took AAL two days to get back above the uptrend line. This action kind of negates the fact that it closed below. But those of us who watch stocks know this may have been a precursor for things to come. The second red circle is when the downtrend actually begins.

AAL stayed in this downtrend for about three months. There were several places you could have gone short if you short stocks .

In October of 2014, AAL gapped up over the downtrend line. From there it ran all the way to the old highs of about $44.50. It danced along the resistance line for several trading days before gapping up again. This time the gap up led to a choppy mess. But there is no way you could have seen that coming.

After the second gap up, if I was making good money in AAL, I would have adjusted the uptrend line to where you see it on the chart. The original trend line would have been steeper. It would have touched the bottom of the candles just before the gap up over the resistance line at $44.50 ish             . This adjusting of trend lines isn't for everyone. I will do it if I think a stock may continue higher AND I am already making a fair percent return on my original investment.

At the top of the uptrend line you will notice a red circle. This is the first time there is a close below this uptrend line. Even though AAL wound up going higher from there after a pullback, I probably would not have been involved. I am pretty consistent about getting out of the way when one of my trend lines is breached.

At the all time high (January 2015) you will notice another red circle. This is really where the downtrend begins. I only know this because time has passed and there are more candles to evaluate. In February you will notice another red circle. AAL tried to rally back to the all time highs and failed. This failure allows me to draw the downtrend line. I extended it to the extreme right side of the chart because I would say price is following this downtrend line for now. I like to say the downtrend line is in control at this point.

Notice the word "wedge" on the chart? AAL will break out of that wedge at some point. Either above the downtrend line or below the support line at $46 ish             . When the price breaks the wedge & closes outside the wedge, you can follow it if you choose. The chances are good that the stock price will continue in that direction.

I hope this chart helps. Thanks again for requesting it.


I Want To Draw A Chart For You!
Put your requests for a chart in the comment section of this idea. I will post them as I have time.
dawarravi
2 years ago
Thank you very much for the detailed analysis!
Reply
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