LATAM's Bullish Breakout: Momentum Meets Technical Structure

The setup is clear. LATAM's price action has broken decisively above a key structural hurdle, confirming the underlying business momentum. The stock is now trading above the 200-day long-term moving average of $45.734, a powerful signal that the long-term bullish trend remains intact. More importantly, it has cleared the immediate ceiling at $69.95, a major resistance level that now flips to act as dynamic support. This breakout above resistance is the technical hallmark of a sustained move.

The momentum is further validated by the short-term indicators. The MACD (12, 26) indicator is at 2.853, providing a clear buy signal for short-term traders. This confirms the upward pressure is real and not a fleeting spike. However, the Relative Strength Index (RSI) at 62.92 is the critical warning sign. It sits in neutral territory but is climbing toward the overbought threshold above 70. This suggests the recent rally may be exhausting itself, and the stock is now testing the limits of its current momentum.

The bottom line is a confirmed breakout. The path of least resistance is higher, with the broken resistance at $69.95 now a floor. But the technicals also show the rally is reaching a peak in its acceleration. The next move will likely be a test of overbought levels, where any pause could trigger a pullback to the support at $62.146. For now, the bulls control the structure, but the RSI is flashing a cautionary note.

Volume and Structure: Confirming the Rally

The breakout above $69.95 is a clean technical signal, but it needs volume to confirm the buyer conviction behind it. Without sustained volume, a break above resistance can be a false move. The market is now watching to see if price action can hold above that key level with conviction, as that would validate the MACD's buy signal and open the path to the next resistance zone.

The immediate support level is critical. The stock is trading at $65.13, which is above the immediate support at $62.146. A break below this level would invalidate the bullish structure and likely trigger a pullback toward the next Fibonacci floor at $58.478. For now, the support holds, but it's the first line of defense.

The MACD indicator provides a short-term buy signal, but its strength must be validated by the price action itself. The indicator at 2.853 is positive, but it needs to be backed by price holding above $69.95. If the stock can sustainably trade above that broken resistance, it confirms the momentum and gives the MACD signal real weight. The primary catalyst for a move toward the next target is sustained volume above $69.95, which would signal strong buyer demand.

That next target is the Fibonacci resistance at $74.087. The path to that level is clear: hold above $69.95 with volume, and the rally has room to run. The setup is bullish, but the trade hinges on the market showing the necessary volume to confirm the breakout.

Fundamental Fuel: Strong Q4 Results Drive the Move

The technical breakout isn't happening in a vacuum. It's being powered by a fundamental engine that just hit a gear. The Q4 results show the business model is not just recovering but accelerating, providing the real-world fuel for the stock's rally.

The numbers are explosive. Net income for the quarter surged 78.1% year-over-year to $484 million, a massive beat that signals pricing power and cost discipline are in sync. This isn't a one-quarter fluke; the full-year picture is even stronger, with net income up 49.4% to $1.5 billion. That kind of sustained profit growth is the bedrock of a bullish technical setup.

The real story, however, is in the margins. The adjusted operating margin expanded to a record 16.2%, a 3.5 percentage point improvement over 2024. This structural expansion is the critical signal. It means LATAM is not just flying more planes; it's flying them more profitably. The business model is generating more cash per passenger, which directly funds the aggressive shareholder returns now on display.

And the cash generation is robust. The company generated strong cash flow exceeding $1.4 billion in 2025. That war chest is being deployed with conviction, funding $585 million in share buybacks and a $605 million total dividend payout for the year. This isn't just a return of capital; it's a statement of confidence from management that the cash flow is durable, not cyclical. It's a powerful vote of confidence that supports the higher valuation implied by the breakout.

The bottom line is a perfect storm. The technical chart shows a breakout above resistance, and the fundamentals show a company that is scaling profitably, generating immense cash, and returning it to shareholders. The momentum is real, and it's backed by the numbers. For the bulls, this is the fuel they need to keep the rally running.

Trading Decision: Entry, Exit, and Risk Management

The setup is clear. The breakout above $69.95 is confirmed, and the fundamentals are strong. Now, it's about executing the trade with discipline. The plan is straightforward: ride the momentum, but respect the structure.

Entry: The ideal entry is a retest of the breakout level. Watch for the price to pull back and test the former resistance at $69.95. If it holds there with volume, that's a classic "buy the dip" signal. The MACD is already flashing a buy, and a clean bounce off this level confirms buyer conviction. This is where you step in, aiming to catch the next leg up.

Stop Loss: The structure is simple. The immediate support at $62.146 is your hard stop. A break below this level invalidates the bullish chart pattern. It signals the sellers have taken control, and the rally is over. Protect your capital here. If the price falls through that floor, exit the trade immediately.

Target: The next major hurdle is the Fibonacci resistance at $74.087. That's your primary target. A sustained move above that level would confirm the bullish momentum is accelerating and likely open the path to the next pivot point at $77.755. Until you see that break, the $74.087 level is the ceiling.

The bottom line is a clean, mechanical plan. The technicals show a strong buy signal, but the RSI at 62.92 warns the rally is getting stretched. This trade works only if the price action holds above the $69.95 breakout and the $62.146 support. If it breaks, the trade is over. Manage risk, take the profit, and let the market tell you when to get out.