With oil coming to life, it could put some pressure on airline names. Right now, Virgin America (VA) looks vulnerable to a potential downside trigger.
The stock closing under $33 here today would be a big red flag. We can see a head-and-shoulders pattern has traced out over the past month and a few days with a close under $32 potentially triggering a push lower.
The one thing missing right now is a push higher in volume. We should see an increase in volume to get this ride in motion. The downside target here is $28, although I believe $30 to be a more realistic target.
The stock has already lost bullish momentum with the Relative Strength Index (RSI) falling under 50. Furthermore, the Force Index has dipped into the red, meaning we've gone to bearish on the volume read.
Lastly, the moving average convergence divergence (MACD) is sitting in bearish territory, indicating trend favors a move lower.
The 10-day simple moving average (SMA) has not crossed beneath the 50-day SMA, but we are setting up for that later today or early tomorrow if price stays depressed.
This may be a name in which a trader wants confirmation in a second day under $33, but I simply want a close under $33, given the bearish nature around the rest of the atmosphere.
The same support we see on the daily sits on the weekly chart as well. A loss of $33 this week should set us up for a dip under $30 before we find price support on the weekly chart of VA.
The RSI is fighting to hold 50, and the stock hasn't made a very good short while the RSI is over 50, so that should be a focus for longer-term short traders.
Given we've only had a year of trading, I take the other indicators here with a grain of salt. Yes, we have the MACD with a recent bearish crossover, along with the On Balance Volume falling under the eight-week SMA, but these are new occurrences, so they will be for information gathering going forward, rather than expectations of price movement.
I'd prefer to focus just on the daily chart, but I find the weekly chart with a focus just on the RSI to be worth a watch here as well.
This looks like a chart where anticipation will not pay off. I will wait for a trigger before giving it a go.