XForceGlobal

DAL: Potential Short Term Bullish Reversal 1M, 1D (Jun. 01)

Long
NYSE:DAL   DELTA AIR LINES INC
X Force Global Analysis:


In this analysis, we take a purely technical approach to Delta Airlines (DAL), exploring signs of the stock being oversold, as well as potentially bullish reversal signals demonstrated on the monthly and daily charts .

Monthly Chart

- On the monthly chart, we have counted clear Elliott Waves
- Since 2015, Delta Airlines has been forming a bearish rising wedge pattern
- Moreover, we could spot an extended bearish divergence, with prices forming higher highs, while the indicators formed lower highs
- The Relative Strength Index ( RSI ) formed lower highs, as well as the Moving Averages in the Moving Average Convergence Divergence ( MACD )
- Within the bearish ascending wedge , we could count Elliott Triangle Waves (ABCDE), leading to a breakdown triggered by the Corona Virus (Covid-19)
- Currently, technicals demonstrate that the stock is oversold, and under extended.
- The RSI demonstrates that DAL is at oversold regions
- The MACD shows historical bearish histograms
- However, despite the huge bearish pressure, we can also see signs of a short term potential reversal through candlestick patterns
- The current candle is forming a dragonfly doji candle, in which we see a long lower tail, and a small upper tail, with the candle close close to the open value
- Combining this with Elliott Waves , it could be said that we are in a downtrend counting Elliott Impulse waves (12345)
- This dragonfly doji candle could be the start of a short term trend reversal for wave 4
- While we have failed to break and close above the 0.618 Fibonacci retracement support, it's important to note that we have secured a historical support at $22.45

Daily Chart

- When we zoom into the daily chart , we see clearer signs of a short term bullish reversal
- We have been consolidating within a bullish descending wedge pattern after a severe drop
- Prices have broken out of the falling wedge , as we are seeing a small pullback
- We can also spot a clear bullish divergence , with lower lows on the price, and higher lows on the indicators
- The RSI demonstrates great strength, trading at neutral levels
- The MACD also shows that the trend is backed by momentum, as it creates a steady uptrend without any death crosses
- We can spot a lot of gaps ranging from $20 up to $56
- Despite the high trading volume , the current range starting from the drop was extremely choppy


What We Believe

Combining the evidence suggested in the daily chart with the analysis of the monthly chart, a probable case would be a further rally up filling the upper gaps at $30 ranges, completing wave 4 on the monthly. From that point, we could see further correction, filling the gaps located below the current price, before we see a mid-term trend reversal leading to a bullish rally to fill the gaps above. While it's important to also take into consideration the fact that Delta Airline's fundamentals have also been heavily affected by Covid-19, technical demonstrate a high probability for a short term bullish trend reversal.

Trade Safe.

Comments

three words. untested pivot point
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