American Airlines Group Technical Analysis

American Airlines continues to see poor resulting in the wake of COVID-19, with prices now almost a third of what they were only a few months ago. This is troubling news for investors who would have questions surrounding AAL’s ability to weather this crisis. We’ll be looking at some technical details to try and better understand any underlying trends and what this might result in for the stock.

RSI

The Relative Strength Indicator (RSI) is a specific indicator that is used to detect if a stock is over sold or over bought. The RSI is calculated using average price gains and losses over a given period of time. The default time period is 14 periods with values bounded from 0 to 100. A reading of above 70 means the stock is overbought highlighting a bearish signal that the stock might fall in price. This is not the case with American Airlines indicating that it might not necessarily be either overbought or oversold but as it is in the middle of indicator indicating that it might be better to hold onto this position, in the near term.

Bollinger Bands

The Bollinger bands are an additional indicator used in technical analysis to detect volatility if the bands are close together then there is considered to be low volatility however if the bands widen then there is considered to be high levels of volatility. Also it is very uncommon for a stock to move outside the Bollinger bands if it does, it will more often than not shift back inside the Bollinger band. In the graphic above we can see that the Bollinger Bands have narrowed and for now that suggests that the price is more stable and less volatile, again indicating that the price is likely to remain in this price range.

Volume

Coupled with the increase in Volume as we can by the vertical bars underneath this highlights that a larger number of investors are buying the stock, with such a greater than average number of interactions the volatility of American Airlines is likely to increase as well as a likely rapid increase in the value of the underlying stock.

MACD

The Moving Average Convergence (MACD) is a trend momentum indicator that shows the relationship in this case between the 12 day and 26 day moving averages. It is commonly used as a buy or sell signal and as it is in this case the MACD has crossed above the signal line indicating a buy signal.

With all this said it seems that the overall technical analysis of American Airlines is inconclusive and more fundamental analysis needs to be undertaken before it is clear in which direction AAL will move, but from what we can see AAL is currently very in a relatively stable position, and we are unlkely to see any massive changes in this stock price, unless there is a major change or announcment made, such as a the end of COVID-19.

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