Looking at the technical picture on our daily chart of the Southwest Airlines stock (NYSE: LUV), after finding good support near the 30.24 hurdle in the end of July and the beginning of August, the share price started slowly grinding higher again. Last week, it managed to break and stay above a short-term tentative downside resistance line drawn from the high of June 5th, which now may clear up the path to some higher areas. We will take a somewhat bullish approach, as long as the stock stays above that downside line.
A break of the aforementioned downside line may have given the buyers more confidence that LUV could continue climbing higher. The share price may travel to its next possible resistance zone, at 36.09, marked by the high of July 15th. Initially, the stock might stall there for a bit, or even correct slightly lower. However, if LUV remains above the 32.66 hurdle, which is marked near the highs of July 28th and 29th, that could invite more buyers into the game, as they may take advantage of the lower price and lift it up again. If this time the 36.09 obstacle surrenders and breaks, that would confirm a forthcoming higher high, potentially opening the door for further advances. We will then aim for the 38.62 level, marked by the high of June 16th.
The RSI is slightly above 50 and points higher. The MACD is fractionally below zero but has just moved above its trigger line. Although the MACD is not as clear right now in terms of showing the next possible directional move, the RSI indicates that the price is picking up upside momentum, which may be inline with the above-discussed idea.
Alternatively, if LUV moves back below the previously-discussed downside line and falls below the 30.24 hurdle, marked by the lowest point of July, that may spook new buyers from entering for a while. The stock might end up sliding to the 28.32 obstacle, a break of which could set the stage for a move to the 25.56 level. That level marks the low of May 18th.
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