For those who may have missed it, shares of Boeing (BA) broke to new recovery highs out of a rising wedge or ascending triangle pattern on the daily chart, sending prices higher in solid breakout mode.

Let’s take a look at the daily chart to see this breakout, as well as upper resistance levels to watch and lower support levels to guide traders.


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Starting with the June 2009 price high of $52 per share, Boeing then moved into a rising consolidation pattern, which is a hybrid between a rising wedge (traditionally bearish) and ascending triangle (traditionally bullish).

Instead of classifying consolidation patterns as bullish or bearish, I recommend classifying them as simply consolidation patterns, and then playing the breakout in either direction in an attempt to capture a potential quick profit once price breaks either the upper or lower consolidation trend line (and placing a close stop in the event of a trap, which happened with the false breakdown late October).

In this example, BA broke the upper trend line at the $57 per share level as volume and momentum surged to new (swing) highs, confirming the breakout and setting up a quick long trade for those who saw this in real time.
There still may be an opportunity to buy a pullback—should one occur—to the $57/$58 level, though any move under $54 per share (50-day EMA and trend lines) clearly would invalidate this as a horrendous bull trap. Be careful if today closes as a doji (indecision/reversal) candle so far above the 20-day EMA—that’s just asking for mean reversion short term.

Otherwise, upper targets include the price projection target (height of the pattern added to the breakout zone), which is $52 - $38 = $14.

If we add $14 to the $67 breakout, then we have a possible classic chart pattern target of $71. There’s major overhead resistance to achieve that target, however.

Otherwise, let’s look to the weekly chart for other possible overhead targets and resistance levels.


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We can see that the upper resistance level at the $56 price came from the 38.2% Fibonacci retracement. Once price solidly broke above this boundary, it set up an open-air play to the 50% level at $65, which is now just $3.50 away. It is an obvious resistance level to watch.
The $65 level aligns with a prior price swing high (resistance level) in July 2008, so we have a Fibonacci and a prior price swing high confluence resistance level at $65.

Should price break that level, the 200-week simple moving average rests at $68.00 per share.

So I’m not sure the pure pattern target at $71.00 comes into play easily, or without pullbacks/retracement should that level be reached.

Even if you’re not trading it, this is an interesting pattern to watch.

By Corey Rosenbloom of AfraidToTrade.com