Down Goes Delta DAL on Weekly Reversal
Delta Airlines (DAL) shares reversed their uptrend into a downtrend on the weekly frame as price continues to decline rapidly.
Let’s highlight the reversal and pinpoint the key target price in play right now:
Shares rallied strongly from 2015 to the December 2015 price peak into $52.00 per share.
Carefully view the “triple top” pattern (Red curved arrow) and the negative momentum and volume divergences that developed through 2015 ahead of the current reversal.
Price ultimately broke under a rising trendline in April that set in motion the May-to-June three-week collapse.
If you’re holding (investing) a stock with a lengthy uptrend and extended negative divergences, odds shift toward reversal instead of trend continuation – it’s time to be more defensive in these environments.
Price achieved a test (touch) of the rising 200 week moving average and reversal point from October 2014 at the $33.00 per share level.
We’ll be focusing on this pivot price and key target for any short-term trades.
It would be logical to expect a bounce off this level but if it doesn’t happen soon, we could see four, five, and more weeks to the downside toward $30.00 and lower.
Delta (DAL) gives us a good example of a strong stock stalling on divergences and then breakdown from up to down ahead of a rapid collapse (which we’re seeing now).
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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
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