American Airlines, Alibaba, Riot Blockchain Stocks Attempt To Break From This Pattern: What's Next?

American Airlines Group, Inc AAL, Alibaba Group Holdings, Ltd BABA and Riot Blockchain, Inc RIOT have recently been trading in descending channel patterns on the daily chart, making lower lows and lower highs between two parallel trendlines. The pattern is bearish for the short term but can be bullish down the road.

For bearish traders, the "trend is your friend" (until it's not) and the stock is likely to continue downwards. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
Bullish traders will want to watch for a break up from the upper descending trendline, on high volume, for an entry. When a stock breaks up from a descending channel, it's a powerful reversal signal and indicates a rally is likely in the cards.

The American Airlines Chart: American Airlines began trading in a falling channel on Oct. 6, making consistent lower highs and lower lows. On Friday, the stock attempted to break up bullishly from the channel but failed and wicked from the upper descending trendline of the pattern.

American Airlines is having difficulty breaking up from the pattern because of a key support and resistance level at $19.35 the stock has been rejecting.

The Alibaba Chart: On Oct. 5, Alibaba reversed to the upside after a year-long downtrend where the stock lost over 56% of its value. After bouncing up 31% from the $138.43 low, Alibaba created a bearish double top pattern on Oct. 20 and Oct. 22 and then fell into a falling channel on the daily chart.

On Friday, the stock attempted to break up from the pattern but rejected and wicked from the upper trendline. Alibaba may continue to trade down in the channel, but could bounce when it reaches a support level at $163.60.

The Riot Chart: Riot reached a high of about $32.81 on Oct. 20 but because the area is a resistance zone the stock rejected and wicked from the level before trading down into a falling channel.

Like American Airlines and Alibaba, Riot attempted to break up bullishly from the channel on Friday but by early afternoon had so far failed to make the break due to low volume.