Technical Analysis – McDonald’s stock completes a head and shoulders
McDonald’s stock falls after disappointing earnings
The fall completes a head and shoulders formation
Both the RSI and the MACD corroborate the reversal
McDonald’s stock fell sharply yesterday after the firm reported its first quarterly sales miss in nearly four years. The price closed below the $287.00 barrier which can be considered as the neckline of a complex head and shoulders pattern that had been forming since December 11.
Although in the bigger picture, the stock continues to trade above the long-term uptrend line drawn from the lows of June 2020, the completion of the H&S likely signals a near-term bearish reversal.
The daily oscillators support that notion. The MACD, although it is still above zero, is lying below its trigger line and is pointing down. It could obtain a negative sign soon. The RSI has already fallen below 50 and looks to be headed towards 30.
If investors are reluctant to buy the stock at current levels, then the stock may slide towards the $277.70 barrier, marked by the low of November 30, where another break could see scope for bearish extensions towards the round number of $270.00.
For the picture to turn bullish again, the stock may need to climb all the way towards its record peak of 301.80, and even break higher. This would take the share price into uncharted territory, with the next possible zone that could act as resistance being the psychological figure of $310.00.
To sum up, McDonald’s stock tumbled after the company’s disappointing earnings results, with the fall signaling the completion of a head and shoulders technical pattern on the daily chart.Related Assets
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