American Airlines Group Inc (NASDAQ: AAL)

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo.

Take a look at the 1-year chart of American (NASDAQ: AAL) below with the added notations:

1-year chart of American (NASDAQ: AAL)

AAL has had a rough slide so far in 2018. However, since the low last month, the stock appears to have formed a double bottom (green) price pattern. The pattern is as simple as it sounds: Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again.

As with any price pattern, a confirmation of the pattern is needed. AAL would confirm the pattern by breaking up through the $40 resistance (red) that has been created by the double bottom pattern.

The Tale of the Tape: After trending lower in 2018, AAL has formed a double bottom price pattern. A long trade could be entered on a break above the $40 resistance with a stop placed under that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT