Take a look at the 1-year chart of McDonald’s (NYSE: MCD) below with added notations:
After rallying in January and February, MCD has been trading mostly sideways since the March 1st peak. During the sideways move the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.
MCD’s rectangle pattern has formed a resistance at $100 (red) and a $94 support (green). At some point the stock will have to break one of the two levels.
The Tale of the Tape: MCD is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $94 or on a breakout above $100. The ideal short opportunity would be on a break below $94.
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