technical analysis MCD

Technical analysis of MCD

MCD, the representative CFD based on shares in McDonald’s Corp, has remained in the lower end of its range so far today but not tested any new lows so far. This comes after a slight disappointment from the company’s earnings report pre-market today, with earnings per share (EPS) announced as $1.70 against the consensus of $1.77. This technical analysis of MCD looks at areas of possible importance on the four-hour chart.

High resistance here is the upper end of the range since December at around $216. Low support seems to be the lower zone of the same range in the area of $206. This relatively narrow range suggests reluctance of participants to commit amid economic uncertainty.

Technical indicators on MCD H4

 

Moving averages give a sell signal, with the 50 and 100 SMA significantly below the 200 and all three above the price. However, the 50 SMA from Bands has moved up slightly since the end of last year and now overlaps the 100. This means that the area just below $212 could be an important resistance in the event of a bounce next week or tomorrow. To the downside, the 200-day MA (i.e. on the timeframe immediately above this) around $204 is the next significant support in view.

There is currently no clear oversold signal from either the slow stochastic (15, 5, 5) or Bollinger Bands (50, 0, 2), but the former at around 22 is very close to the trigger zone of selling saturation. As is almost always the case for a CFD on an individual share, buying volume is much higher than selling.

Price action and Fibonacci

 

As noted above, the relatively very narrow range of only $10 since last month suggests either lack of interest or unwillingness to commit among participants. Patterns of candlesticks such as three soldiers at the end of the first week of January have been unreliable, with the range appearing very strong for now at least. Volatility within it has been high, though, so there are still potentially good opportunities here for daytraders. The main trigger in view for longer term traders would be a breakout below c.$205 this week in reaction to weaker EPS.

The 50% zone of the weekly Fibonacci fan is a possible resistance but absent a big change in the tempo of price action it’s unlikely to be tested anytime soon. The 61.8% fan is still below the crucial psychological area of $200 but one might expect a test of this area within the next few weeks.

Technical analysis of MCD: summary

 

TA overall paints a somewhat negative picture for MCD. Although the recent range has appeared likely to hold for some time, risk is skewed more to the downside after today’s earnings report disappointed somewhat. Fundamental factors to watch over the next few weeks include possible loosening of governments’ restrictive measures and of course fiscal stimulus in the USA.

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