Boeing Stock Is Losing Altitude and Setting Up as a Short Candidate
A bearish eveningstar candle pattern has formed on the Boeing (BA) - Get Report chart just below a reinforced level of multiple moving average resistance. Momentum has been fading during this consolidation phase, which looks like it will resolve to the downside.
The daily chart shows the stock price moving in a range between $135 and $123.50 since March and the 50- and 200-day moving averages converging within the channel parameters. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and has been tracking lower and moving below its centerline on both timeframes. The relative strength index has been doing the same and is below both its centerline and its 21-period moving average. Chaikin money flow, which is oscillating around its centerline, is back in negative territory, and the accumulation/distribution line has crossed below its signal average. These indications reflect waning price and money flow momentum, as investors lose faith in the recuperative power of this consolidation period.
The stock closed below resistance temporarily last week, but the broad market bounce pulled it back up and returned it to mid-channel range, where it has met a confluence of moving average resistance. The 50- and 200-day averages along with the centerline Bollinger band 20-period average are positioned just below the lower end of a small downside gap.
Over the last three trading sessions, an eveningstar pattern has formed under this area. This bearish reversal pattern consists of a large white or up day candle, followed by a narrow opening and closing range "doji" candle, and it is completed by a large dark or down day candle. It represents a transition from bullishness to bearishness and is usually seen at market tops.
The pattern requires follow-through price confirmation, and that would come with another lower candle close at or below channel support and would be a short entry point using a trailing buy-to-cover stop.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.