Alaska Air (ALK) shares have experienced some periods of turbulence over the last 52 weeks, the most recent a downdraft of over 30% from their April high to their July low. They have managed to retrace 50% of the decline and in the process formed an inverse head and shoulders pattern on the daily chart, with neckline resistance at the $68 level.
A successful breakout could return Alaska Air's stock price back up to the previous April highs.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is above its center line on both timeframes. The vortex indicator, which identifies early shifts in trend direction, is making a green-over-red line bullish crossover. These are positive indications of price and short-term trend momentum. Chaikin money flow crossed into positive territory shortly after the July low, which formed the "head" of the pattern, and the money flow index, a volume-weighted relative strength measure, is above both its center line and 21-period average. Volume is light and will have to improve to sustain a breakout move, but money flow as a percentage of volume is clearly to the buy side.
The stock is a long candidate after an upper candle close above neckline resistance utilizing a trailing percentage stop. The inverse head and shoulders pattern projects a price target calculated by adding the height of the formation to the neckline, and it targets a return to the April highs in the $82 area.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.