Air Arabia has been trading in a narrow range for the past couple months, swinging between 0.79 and 1.16 AED. however, the trading range is in form of a bullish channel, on which AirArabia is currently on its lower band. the stock is expected to reach 1.12 AED in the short term, with a possible positive breakout for the medium to the long term.
As seen from chart 1, the stock has formed many gaps, which, by theory should be filled, at least once, to confirm the direction of the movement. the rectangular gap in the daily chart is a runaway gap, while the gap below the lower band of the channel explains the exhaustion of the bearish volatility. Air Arabia has broke the lower band to the upside, indicating a 1.12 AED as a potential target.
my bullish sentiment on this stock is backed by the RSI which is bouncing back from its oversold areas, and backed by the MACD as well, with a curve starting to flatten.
looking for other time frames, indicators are even stronger for a bullish movement.
on the weekly chart, the channel is still there, the RSI is bouncing up as well, and, most importantly, a bullish engulfing pattern was created that needs to be confirmed by a bullish candle this week.
the major signs are in the monthly chart. beside all those signals mentioned above, a long leg doji is formed, supported by great MACD bullish crossover.
i recommend a buy action on current prices, around 0.92, with a stop loss below the lower band of the channel, and a first take profit at 1.12 AED, while the second long term target is at 1.67 AED, if a breakout of the upper band is broken.
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