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Can Boeing Break Out After 737 MAX Gets Green Light From Europe?

European regulators deem the Boeing 737 MAX safe to fly. Here's how to trade Boeing, which sits at the cusp of a breakout now.

Boeing  (BA) - Get Boeing Company Report shares were enjoying solid gains on Friday, up 3.5% on positive news related to the 737 MAX.

The European Union Aviation Safety Agency deemed the 737 MAX safe to fly. That’s a big deal for Boeing, as it will likely get the green light from the U.S. Federal Aviation Administration at some point as well.

If Boeing can get the 737 MAX back into service here in the U.S. and in Europe, it will alleviate plenty of stress and worry among investors.

While that may be a big positive, Boeing still faces plenty of headwinds, including a slow return of airline traffic and low demand for new plane orders. Still, gaining clarity and approval with its most successful jet is an enormous step in the right direction.

The news is generating a bullish reaction in Boeing stock, which now sits on the cusp of some major potential rotations. Let’s look at the chart.

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Trading Boeing

Daily chart of Boeing stock.

Daily chart of Boeing stock.

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Shares bounced hard off the $120 level in May, surging all the way up toward $235 in just a few weeks. Since then though, shares have settled into a painful and frustrating downward channel.

However, the action has been encouraging lately. 

After a breakdown to new multi-month lows in September, Boeing stock quickly reversed higher off channel support. The $159 level has become support over the last three weeks, while Friday’s gap higher sent shares above the 10-day and 50-day moving averages.

Now comes the tricky part.

On the upside, shares are running right into channel resistance. If Boeing stock can push through this level, then investors will be looking for a rotation up through last week’s high (and this month’s high) at $175.56.

If it can do that, Boeing may gain some serious momentum. Specifically, it will put the September high in play up at $180.85, followed by a possible test of the August high near $190 and the 200-day moving average.

Conversely, it would be discouraging to see Boeing stock fail to conquer channel resistance even with such positive news working in its favor. If it fails to break out over this level, keep an eye on the 10-day and 50-day moving averages.

A break of these marks puts $159 range support back in play. Below that and the September low could be in play near $145.