Don't Ignore This Chart!

Key Moving Averages Converge as Boeing shows Signs of Accumulation

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Boeing has been stuck in a trading range since late March and signs of accumulation suggest an upside breakout. On the price chart, notice that BA surged from the 102 area to 135 from mid February to mid March. The stock was certainly entitled to a consolidation after a 30+ percent advance. The 200-day moving average flattened in the middle of this consolidation and the 50-day moving average is also near the middle and flattening. It looks like Boeing is gearing up for a move here. But which way?


 

I added volume and On Balance Volume (OBV) as indicators. Upside volume has been fairly robust since mid February and On Balance Volume (OBV) hit a new high last week. On Balance Volume is a cumulative indicator that adds volume on up days and subtracts it on down days. The new high in OBV suggests that upside volume is outpacing downside volume and this points to accumulation within the trading range. Accumulation increases the chances of an upside breakout. Returning to the price chart, chartists can look for a close above the May high (135) and a bullish moving average crossover to turn bullish on Boeing. 

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--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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