Tuesday, April 14, 2015

American Airlines (AAL) chart analysis

Here is a 2-year chart of AAL:

Next, let's focus on the past 6 months:

As this rectangle develops, my goal is to stay patient rather than predict how this pattern resolves itself. If prices close decisively above the January and March highs, then I'll be looking to buy at a favorable spot that limits my risk should the breakout reverse. If prices decisively break down below the December, February, and March lows, then I'll be looking to short at a favorable spot that again controls risk. My goal is to participate in rather than anticipate the trend.

For more aggressive trading, I might look to buy shares at the bottom of the trading range and short shares at the top of the range. The next earnings report is due in a week or so. I almost never hold a position through an earnings announcement.

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