GO
Loading...

Boeing Chart Looks Set to Takeoff

Two years behind schedule, Boeing is finally ready to test-flight its hotly anticipated aircraft, the 787 Dreamliner, Tuesday.

The test-flight data marks a huge step in the development of the revolutionary airplane, whose promise of increased fuel efficiency and comfort has attracted a record number of orders for a plane still in development.

Within those 2 years -- Boeing has managed to ruffle a lot of feathers, announcing five embarrassing test-flight delays, which ultimately resulted in delays to its delivery schedule.

The Boeing chart displays the same sort of conditions: promise and problems.

The dominant feature on the chart is the up sloping triangle. This is a bullish pattern. It is created by three features:

  • The first is a historical resistance level. This is located near $53.00.
  • The second feature is a well defined up-sloping trend line. The trend line with Boeing has been tested several times so there is a high level of probability that any retreat will successfully rebound from the value of the trend line.
  • The third feature is a fast and consistent rise near the base, or vertical section of the triangle pattern. This base is defined with 5 weeks of consistent price falls. This is the area where we place the measurement calculation for the triangle base.

In this case we can think of the up-sloping triangle as a ramp that allows the airplane to gather sufficient airspeed to a smooth takeoff. Takeoff velocity is achieved when the price moves above the resistance level near $53.00. The upside target for this launch is calculated using the base of the triangle. This measurement is projected upwards and gives an upside target near $71.00.

The up-sloping triangle pattern comes with two important warnings:

  • The first is that the chart pattern is a measured move or calculated target. It is not a signal of a trend continuation. When prices achieve the upside target near $71.00 there is no indication of how the trend will develop beyond that point. It may develop into a trend continuation, or the flight may simply return to the ground level. The support level in this situation is created by the up-sloping trend line. A successful retest of the trend line support points the way to a continuation of the uptrend and a retest of the $71.00 chart pattern targets.
  • The second warning is similar to a brace position. It's a crash warning when the price closes below the up-sloping trend line. This shows a failure of the up-sloping triangle pattern. The depth of the fall is calculated using the base of the triangle and projecting it downwards. This gives a downside target between $36.00 and $34.00. A failure of this up-sloping chart pattern signals a none-too-soft landing with limited support near $42.00.

Despite Dreamliner's prior launch hiccups, the build up of momentum in price shown by the trend line and the up-sloping triangle pattern suggests there is a higher probability of success for Boeing.

The altitude target for this first flight is near $71.00 with the potential upside peaks near $76.00. The higher peak is calculated using the inverted head and shoulder pattern trend recovery pattern

Boeing present a trading opportunity within the context of a well defined uptrend recovery.

If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com. We welcome all questions, comments and requests.

CNBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.

  • Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.

Asia Economy