Southwest Airlines getting ready to take flight?

I found my way into this stock back in February, when it had cleared the $50 level and all time high. There was nothing but clear skies ahead for this airline company to fly into. As trend traders, this is something that we look for. We want to have space for a trend to develop that we can stay in as long as possible. More time in a trend equals more profit. Eliminate the time and you eliminate the profit. Clear space ahead and well placed stop losses help us to achieve this.

Monthly Timeframe

I noticed this opportunity as I had it on my watchlist and was waiting for price to make new highs and show strength or go back into its longer term consolidation zone. The monthly timeframe here shows the major pivot point that I was looking for to be cleared. Once this happened, I could go through the rest of my preflight checklist to see if takeoff was possible or we would be sitting on the tarmac a bit longer.

Weekly Timeframe

The weekly timeframe showed me that price was above its 200sma, in an uptrend and had green bars on the Dynamic traders trend filter. This brought me one step closer to getting off the ground and into the air.

Daily Timeframe

The daily chart was in alignment with the weekly timeframe and I could now look for my entry point. This happened when price gapped up and formed a bull flag continuation pattern. I was all cleared for takeoff and just had to set my order. As you can see, price went in my favor immediately but then experienced a deep pullback that almost brought this trade to a crash landing. My stop loss was well placed and just avoided being hit before the trend resumed. Now we are on the verge of possibly breaking out again, where I would look to add more positions to this already profitable trade. Adding more positions to a winning trade is how you grow your account and accelerate the process. It’s smooth skies for now but that can change at anytime.

Plan the trade and trade the plan!

Chris DiBiase

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