Important points
McDonald’s shares fell 6% in after-hours trading Tuesday after health officials said they were investigating an E. coli outbreak possibly linked to the fast food chain’s Quarter Pounder burger. The expected decline on the news could lead to a re-examination of the past 16 companies, setting a -month trading range before the stock price could continue its long-term upward trend. Investors should keep an eye on important retracement levels near $300, $280, and $260 on the McDonald’s chart. The measurement principle calculates the distance between the two trend lines of the trading range and adds: The amount into the breakout area predicts a bullish target price of $353.
Shares of McDonald’s (MCD) fell 6% in after-hours trading on Tuesday after health officials said they were investigating an E. coli outbreak possibly linked to the fast food chain’s Quarter Pounder burger.
The Centers for Disease Control and Prevention (CDC) announced that 49 E. coli infections have been reported in 10 states, and McDonald’s has temporarily removed its popular hamburger from restaurants in those jurisdictions and is distributing shredded onions. It stopped.
The Quarter Pounder burger is a restaurant staple, generating billions of dollars in revenue each year. Before falling after the market on Tuesday, McDonald’s stock had risen about 24% in the past three months, driven by belief that the $5 value meals the company launched in June could lead to increased sales. Ta.
Below, we analyze the technicals on McDonald’s chart and identify important price levels to watch out for.
Pay attention to past trading ranges
McDonald’s stock fluctuated within a 16-month orderly trading range until breaking out of this pattern late last month.
In a positive sign for bulls, increased volume is supporting the stock’s recent rally. Additionally, in September, the 50-day moving average (MA) broke above the 200-day moving average, forming a golden cross, a bullish chart signal for price growth.
However, given the expected decline on the news, the stock may retest its previous trading range before continuing its long-term uptrend. Let’s take a look at the three important retracement levels on McDonald’s chart to predict a bullish price target.
Key retracement levels to watch
The first floor to watch is around $300, just above the level where the stock closed Tuesday’s after-hours trading. This position on the chart marks the confluence of support from the 50-day moving average and the upper trendline of the trading range, potentially reversing from the area of previous resistance to the lower bound of future support.
If the bulls fail to hold this level, they could fall to the $280 area, and the stock is a buy near the trend line connecting multiple peaks and troughs on the chart from November 2022 to April of this year. may attract interest. This location is also very close to the rising 200-day moving average.
Further declines could cause the stock to reapproach the lower support at $260, with investors buying near the horizontal line connecting the range of comparable trading levels on the chart from late 2022 to July of this year. Opportunities may be explored.
Monitor bullish price target
To predict the potential target price on McDonald’s chart, you can use the measurement principle.
To do this, calculate the distance in points between the two trend lines of the trading range and add that value to the breakout area. For example, adding $53 to $300 predicts a bullish target of $353, an area where investors may focus on bank earnings.
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As of the date this article was written, the author did not own any of the securities mentioned above.
