JetBlue Airways (JBLU) declined during January. The month is over and it looks like the correction is also ending.
This could be the time to get in line for the next rally phase.
We decided to change from our typical bar chart to a Japanese candlestick chart for our analysis of JBLU. In this daily candlestick chart, above, we can see the rally from late August to December and the subsequent correction. Notice the upper shadows above $23 as the gains are rejected? Prices break down in January below the 50-day moving average line but have stopped, so far, above the slightly rising 200-day line. The volume of trading has risen sharply in recent days, telling us that investors and traders have dumped shares.
The On-Balance-Volume (OBV) line has moved up and down with the price action. The decline was sharp on Thursday and Friday last week but the high/low range was narrower on Monday and still narrower today. The Monday/Tuesday candle pattern is a possible harami and it may be marking the end of the January decline. In a harami, the second day's real body (the area between the open and the close) is inside the prior day's real body, much like an inside day on Western charts. Momentum looks like it has peaked, too.
This three-year weekly chart of JBLU, above, gives a perspective from a higher altitude. Here prices are pulling back to the rising 40-week moving average line. The weekly OBV line is overall constructive and the MACD oscillator is giving a liquidate-longs sell signal, not an outright sell.
Bottom line: If the correction in JBLU is over, then we want to trade JBLU from the long side. A close above $23 should mean a stronger rally to $27 is under way.