Boeing Flies Higher, But Could This Long-Term Bearish Pattern Keep Stock Grounded?

Boeing Co. BA shares are trading higher Thursday after the Chinese aviation authority issued a positive review of the Boeing 737 MAX plane, allowing the model to return to China after two and half years.

Although trading significantly higher Thursday, the stock has been forming into a bearish pattern thorughout the past few months. The stock was up 5.6% at $198.75 at press time.

See Related: Apple Issues Negative iPhone 13 Forecast as Boeing Gets "Okay" from China

Boeing Daily Chart Analysis

• Throughout the past few months, shares have fallen below support in what technical traders call a descending triangle pattern. Despite the strong move Thursday, if the stock continues to hold below this trendline it may continue to see an overall downtrend in the longer-term period.
• The $205 price level is an area where the stock has been able to hold as support in the past, but may now be an area of resistance if the stock can hold below it. Pattern resistance may continue to hold as resistance if the stock continues to fall.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock is likely facing a period of bearish sentiment..
• Each of these moving averages may hold as a potential area of resistance in the future.
• The Relative Strength Index (RSI) saw a dip lower the past few days although it looks to be seeing a slight bounce Thursday and sits at 35. This shows that the stock is seeing many more sellers and nears the oversold area as well.

What’s Next For Boeing?

Bullish traders are looking for the stock to make a bounce and start to trend higher with higher lows. Thursday could be the start of this bounce despite the bearish pattern breakdown.

Bulls would then like to see the stock get back above the $205 price level and be able to cross the pattern resistance. Eventually bulls want to see the stock be able to push above the moving averages for sentiment to change.

Bears are holding control of the stock and would like to see it continue to hold below the pattern resistance even though the stock has broken out of the pattern. If the price stays below this resistance and below the moving averages, bears will keep hold of the stock.

Photo: pjs2005 from Hampshire