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January 8 Chart of the Day - Alaska Airlines

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You may have heard that passengers aboard an Alaska Airlines (ALK) flight last week experienced a major scare, as an emergency exit-sized gap suddenly appeared in the side of the plane, leading to a rapid decompression. The plane was en route from Portland to Ontario, California, when the incident occurred.

As per a report by The Wall Street Journal, the flight took off on Friday afternoon and was forced to return to Portland International Airport within 30 minutes. The plane, at 16,000 feet, had 171 passengers and six crew members on board, all of whom survived the frightening ordeal.

Thank God everyone survived!

This has put the airline as well as the plane's manufacturer Boeing (BA Chart of the Day on 12/8/2023) squarely in the headlines with a lot of scrutiny on safety.  As a result, both company's respective stock prices are trading down today.

Alaska Air was trading down nearly 6% earlier today near $35.50 but has made a significant bounce back to the upside.

So we wanted to take a look at their chart from a price action technical analysis perspective.

On the monthly chart we can see that price is trading well below a change control zone roughly between $50 and $55.  The change control zone is represented by the light gray rectangle.

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

Down on the weekly chart we can see price has recently been making a series of higher highs and higher lows after an abrupt downward trend change at $31.50

So did this news simply accelerate a normal price action cycle?  Perhaps.

Only time will tell for sure but we can see that this morning's price bounce happened at a technically correct level, the bull 61.8% Fibonacci retracement.

Coincidence or math behind the Fibs?

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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