Boeing Symmetry and Resistance

 | Jan 18, 2013 | 11:30 AM EST
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I meant to write an article on (CRM) today, but Boeing (BA) was a bit more compelling!

I will still leave you with a chart in, though, that shows you it is time to trail up stops in that one as we are facing a major resistance decision in this stock on the weekly and daily charts.

With all this bad news for Boeing, why is it rallying? OK, well, I don't know for sure, but I took a look at this stock and I see some things that I like on this chart. First of all, the recent low was made at a test of the 200 SMA. Boeing has passed this test so far with a relatively powerful reversal. I'm also seeing what I call symmetry in this stock on both the time and price axis of the market. (Symmetry is similarity or equality when comparing swings in the same direction.)

First, I've illustrated the time symmetry on the daily chart. Notice that many of the prior swings in time are similar or equal. Some of the prior swings were nine to 11 trading days from the high to low. Note that the recent low has been made nine trading days down from the recent high. So that is the time symmetry.

As far as my Fibonacci price analysis is concerned, the most recent low in Boeing has been made within a price cluster at the $72.02 to $72.63 area which included a couple of symmetry projections of prior declines on this same chart. These projections also overlapped a 0.618 retracement of a prior swing along with a 1.272 extension of another.

So far this low has been followed by a nice rally. Since the upside targets are still a bit above current levels, the strategy for an entry will be for a buy on a pullback to the Jan. 17 low in this one, (anywhere from 50% to 78.6% which is currently $73.31 to $74.16) The pullback zone can be recalculated if a new high is made beyond the Jan. 17 high.

Our risk will be defined below the low made on Jan. 17 at $72.68, or for those who like to give their trades a little more room, a stop can be placed below the second price cluster support decision at the $70.95 to $71.52 area. If price continues to hold above the $72.68 swing low, target No. 1 for the trade is $79.47, target No. 2 is $81.32 and target No. 3 would be $86.66.

A failure to hold above one of these support zones tells me that I'm wrong on the trade.

Remember in that many moves tend to terminate at extensions of prior swings. We are looking at a ton of extensions here on this weekly chart. It's time to really tighten up stops in this one. We may also consider a short against this same zone if the 30-minute chart starts to shift to bearish.

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