In this lesson, we examine how the 200 MA acted as a resistance that kept AAL's stock from rising.
If you did not know, the 200 day moving average can act as a powerful resistance that can hinder a stock from going up. Whenever you see a stock approaching its 200 MA from below, you should take note.
The chart above shows the power of the 200 MA.
The yellow line is the 200 MA. Notice how for 2 times the stock was not able to rise further after encountering the 200 MA.
A declining 200 MA also shows us that the stock is not healthy in the long term.
The second time AAL hit the 200 MA, it also formed a double top and broke below a downtrend line. Hence the decline.
Hope you learned something from this lesson.
For more chart lessons, come back often to visit this site as I often do chart lessons.
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