Finding The Key Short Term Levels In CMG
Many traders have been following the stellar move in Chipotle Mexican Grill (CMG) though the recent sharp pullback has spooked many participants.
Let’s take a look at the key short-term price levels (and chart structure) to watch for potential opportunities in the weeks ahead.
First, the Daily Chart levels:
Two main levels have developed on the chart, which are emphasized on the intraday chart below:
- The first is the Upper Resistance from the falling 20d EMA at $420.
- The second is t he Lower Support via the rising 50d EMA ($404) and “Round Number” support at $400 which is also the April 2012 swing low.
Luckily, these serve as easy reference levels: $400 and $420.
Let’s take a moment to discuss a few more factors from the Daily Chart before focusing on these levels.
The most obvious development is the “creeper” power-rally through early 2012 that provided an extra-stable angle of ascent in price – you just don’t see patterns this clean very often.
The rally produced a mini-bull flag and successful retracement test of the rising 20d EMA in early April.
From there, price pushed one more time to $440 ahead of the sharp retracement/decline that brings us to our current position between these two “Bull/Bear” reference levels.
The potential for a trend reversal exists IF price breaks under the $400 level – that’s something CMG Bulls must watch carefully.
However, the Bears must be on guard for a turn-around rally and breakthrough above the $420 pivot level – a move above $420 suggests a resumption of the uptrend and continuation swing back to $440’s high.
These will be the two objective scenarios that lead us to the game-planning in real-time:
Bullish for Trend Continuity if above $420 or Bearish for Trend Reversal under $400.
The intraday chart clarifies the picture:
The intraday chart with the recent volume and momentum divergences – at the moment – tends to favor the Bears as long as price remains under the $415 pivot (EMA confluence).
The potential for a “short-squeeze” exists between $415 and $420 (the ‘neutral’ zone).
Finally the Bullish Breakout Buy trigger develops above $421 and $422 (to be safe).
If you’re active in trading CMG shares or options, keep these levels in mind in combination with additional signals/trades you are managing.