DAL: Potential Short Term Bullish Reversal 1M, 1D (Jun. 01)X Force Global Analysis:
In this analysis, we take a purely technical approach to Delta Airlines (DAL), exploring signs of the stock being oversold, as well as potentially bullish reversal signals demonstrated on the monthly and daily charts.
Monthly Chart
- On the monthly chart, we have counted clear Elliott Waves
- Since 2015, Delta Airlines has been forming a bearish rising wedge pattern
- Moreover, we could spot an extended bearish divergence, with prices forming higher highs, while the indicators formed lower highs
- The Relative Strength Index (RSI) formed lower highs, as well as the Moving Averages in the Moving Average Convergence Divergence (MACD)
- Within the bearish ascending wedge, we could count Elliott Triangle Waves (ABCDE), leading to a breakdown triggered by the Corona Virus (Covid-19)
- Currently, technicals demonstrate that the stock is oversold, and under extended.
- The RSI demonstrates that DAL is at oversold regions
- The MACD shows historical bearish histograms
- However, despite the huge bearish pressure, we can also see signs of a short term potential reversal through candlestick patterns
- The current candle is forming a dragonfly doji candle, in which we see a long lower tail, and a small upper tail, with the candle close close to the open value
- Combining this with Elliott Waves, it could be said that we are in a downtrend counting Elliott Impulse waves (12345)
- This dragonfly doji candle could be the start of a short term trend reversal for wave 4
- While we have failed to break and close above the 0.618 Fibonacci retracement support, it's important to note that we have secured a historical support at $22.45
Daily Chart
- When we zoom into the daily chart, we see clearer signs of a short term bullish reversal
- We have been consolidating within a bullish descending wedge pattern after a severe drop
- Prices have broken out of the falling wedge, as we are seeing a small pullback
- We can also spot a clear bullish divergence, with lower lows on the price, and higher lows on the indicators
- The RSI demonstrates great strength, trading at neutral levels
- The MACD also shows that the trend is backed by momentum, as it creates a steady uptrend without any death crosses
- We can spot a lot of gaps ranging from $20 up to $56
- Despite the high trading volume, the current range starting from the drop was extremely choppy
What We Believe
Combining the evidence suggested in the daily chart with the analysis of the monthly chart, a probable case would be a further rally up filling the upper gaps at $30 ranges, completing wave 4 on the monthly. From that point, we could see further correction, filling the gaps located below the current price, before we see a mid-term trend reversal leading to a bullish rally to fill the gaps above. While it's important to also take into consideration the fact that Delta Airline's fundamentals have also been heavily affected by Covid-19, technical demonstrate a high probability for a short term bullish trend reversal.
Trade Safe.
