American Airlines (AAL) is exhibiting upward momentum from the April 4 low, with a 100% Fibonacci extension suggesting a target of $16.8. The technical outlook is reinforced by an Elliott Wave zigzag structure from the September 30 low.
From this low, wave A reached 14.05, followed by a corrective wave B pullback, which ended at 12.11. Currently, wave C is advancing in an impulsive Elliott Wave formation. Within this progression, wave (i) concluded at 12.65, and wave (ii) found its base at 12.15.
Wave (iii) extended up to 14.11, before experiencing a pullback in wave (iv) to 13.56. The imminent completion of wave (v) is set to finalize wave ((i)) at a higher degree. A subsequent corrective wave ((ii)) is expected, addressing the cycle from the projected November 18, 2025 low.
As long as the 12.11 pivot holds, pullbacks should find support in 3, 7, or 11 swing structures. This technical framework suggests further upward movement remains a possibility.
We see a clear bullish pattern for American Airlines (AAL) that has been developing since the lows earlier this year in April. The analysis suggests the stock is in an upward trend with a potential target of $16.8. This structure implies that any pullbacks in the coming days are likely temporary dips within a larger move higher.
This technical strength is reinforced by recent industry data showing a significant rebound in holiday travel demand. TSA passenger throughput numbers for the first week of December 2025 are up a solid 6% year-over-year, beating earlier forecasts. Additionally, jet fuel prices have fallen over 10% since their October 2025 peak, easing cost pressures and improving the airline’s margin outlook for the fourth quarter.
For traders anticipating a move toward the target, buying February 2026 call options with strike prices of $15 or $16 offers a way to capitalize on the expected upward wave. This strategy provides leveraged exposure if the stock continues its climb as projected. The timeline allows for the completion of the current impulse wave.
A more conservative strategy would be to sell out-of-the-money put credit spreads, using the recent price action for guidance. For instance, selling a January 2026 $13 put while buying a $12.50 put for protection would generate income. This trade is profitable as long as AAL’s price remains above the short strike at expiration.
We must anticipate a corrective pullback, wave ((ii)), after the current upward push completes. This expected dip will likely present a more favorable entry point for establishing longer-term bullish positions. Shorter-term traders could consider taking profits on initial positions and then look to re-enter during that correction.
All bullish strategies should use the November low of $12.11 as a critical risk management level. A firm break below this pivot point would invalidate the immediate bullish sequence. This price serves as a clear signal to cut losses on any long derivative positions.
