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Fan Yang

American Airlines Group (AAL) Signaling a Bullish Reversal

American Airlines Group $AAL has been in a bearish-neutral mode., but could be setting up for a bullish reversal.

It entered late 2018 in a bearish trend before finding support around $30. Price has been consolidating in a descending triangle since. But price broke lower in late May. 

AAL Daily Chart

(click to enlarge)

Bullish Reversal?
- On the daily chart, we can see that price was in a bearish continuation breakout in May before finding support around $25.
- As we can see price rebounded and did not find resistance in the previous support.
- Instead, price continued to rally and eventually broke above the descending triangle resistance. 
- It is now also breaking above the 200-day simple moving average (SMA).
- I think this price action is a sign that AAL is ready for a bullish reversal.
- The upside from this breakout is at least $40.
- For now, I would limit the upside to the late September 2018 high around $44.
- On the weekly chart, we can see that price is essentially bouncing off a key support area. 
- When we look at the weekly chart, we might think that there is upside to the long-term range resistance around $56-$58.
- Note that if price gets to $42, it will be testing the 200-week simple moving average. 
- Therefore I think we should limit our bullish expectation to the $42-$44 area.
- $32 should hold as support if the market is indeed turning bullish.

AAL Weekly Chart

(click to enlarge)

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