United Airlines (UAL) Shares Signal a Breakout

United Airlines Holdings, Inc. (UAL), the global airline giant, is setting up for another double-digit run higher. Even as broad market indexes are hitting new all-time highs, United Airlines is lagging the market. Shares are still down 45% from their pre-pandemic peak. That's after the stock surged 130% from the lows last March. United shares would have to rally another 80% just to get back to the highs from February 2020.

United Airlines stock has been stuck in an ascending triangle for the past year, signaling a potential breakout in 2021. Take a look:

A strong resistance level at $50 per share (in red) and rising support line (in green) create the triangle pattern. When shares break above $50, look for a quick move back up to $80 per share for gains of about 60%. We can determine that price target by simply taking the height of the triangle pattern using the difference between the high price and low price point. That's $30 for United Airlines stock. When you apply it to the $50 breakout level, we get a price target of $80 per share.

With the stock in the blue section based of the Relative Rotation Graph (RRG), we expect shares to push higher from here. The RRG combines the relative strength of a stock to the S&P 500 with momentum to create a unique view on the stock. It shows that stocks tend to rotate from leading the overall market, weakening as the momentum slows, eventually lagging the market, and then improving as momentum picks back up to come back to leading the market once again. 

Since United Airlines is shaded blue, it means that the stock is improving. It was just lagging the market, so it is moving in the right direction.

The Bottom Line

United Airlines stock is on the verge of a huge rally in 2021. I'm watching the ascending triangle pattern for the point of the breakout that should spark a significant rally from its current price. The RRG shows us that the stock is already trending higher and could break out in the next few weeks.