On Guard for a Deeper Pullback in Chipotle CMG
Wed, Jun 7, 12:51 PM ET, by Corey Rosenbloom
Chipotle (CMG) shares had a bumpy ride after collapsing in late 2015.
After a year of sideways price action at the low, we’re finally seeing life in the form of a bullish breakout.
However, watch what happens next at a critical price level for clues to trading the future of CMG:
The spark of life – and early potential reversal – came with the bullish surge into April 2017.
From there, share prices surged from the $440 breakout to the $500 price level.
Just shy of $500, a series of negative momentum divergences set the stage for a pullback or “take profits” outcome.
That’s what happened and price retraced logically to the 20 and 50 day EMAs.
However, today’s session tilts the odds to a more precarious outcome – that of a deeper pullback.
With price breaking powerfully under the 50 day EMA and lower Bollinger Band near the $465 level, keep your trader eyes at this level.
IF buyers step in, then today will just be a bull trap on the path toward new highs.
If not and sellers win the day – and then the week – then we’re likely to see a steeper retracement to retest the breakout point at $440.00 per share.
Be objective and trade the immediate departure from our current level near $460.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
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