Boeing shares recently made a strong downside break of a major support zone at $120, falling to a low of $102.71 before showing signs of a retracement. Applying a Fib tool on the latest swing high and low reveals that the 38.2% level lines up with the broken support area.
Stochastic is on the move up, which confirms that sellers are taking a break for now. RSI is also heading north so price might follow suit, paving the way for a larger correction to the 50% level around $126.
The line in the sand for any correction move could be the 61.8% Fib or $132, with a break above this level likely to indicate that an uptrend is taking hold again. The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside.
A selloff could last until the previous lows of $102.71 or much lower, depending on how the airline industry and energy sector fare. Lower transportation costs have weighed on prices and profitability for the company.
Earlier in the week, the company announced that Boeing Chief Executive Officer Dennis Muilenburg has been named chairman of the aerospace company, succeeding former CEO Jim McNerney, who is stepping down as a director.
Analysts aren’t too bullish on Boeing shares for now, as the company had to deal with accounting issues recently. Even so, the stock was higher earlier in the week when it reported that United Continental Holdings is nearing a second deal to buy new single-aisle jets from the aerospace and defense company.
Earlier in the year, Boeing stock drew support after the company secured the first of two expected United single-aisle deals, agreeing to sell the airline 40 737-700s for $3.2 billion at list prices.
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