Thursday, 1 February 2018

Chipotle Mexican Grille (CMG): Finally Breaking Out ?

Is CMG ready for a run towards the 2.5 years downtrend line?

The price actions and technical indicators suggest that.

CMG 1 year daily chart as of 31st Jan 2018
CMG 1 year daily chart as of 31st Jan 2018
(click chart to enlarge)


What i like about this swing trade is that this run-up may end up breaking out this 2.5 years downtrend line.

We have seen this movie before in 2016 when CMG prices are in a falling channel while the same 3 technical indicators are showing bullish divergences. The bear rally broke out of the falling channel and ended up kissing the downtrend line in mid 2017.

CMG 5 year weekly chart as of 31st Jan 2018
CMG 5 year weekly chart as of 31st Jan 2018
(click chart to enlarge)


It isn't unreasonable to expect the same. Only this time the prices are closer to the downtrend line, and the correction is another year older. So this time, it may not just kiss the downtrend line, but break out of it.

Also, i forgot to draw it in. This correction from the ATH in Aug 2016 is a bullish falling wedge.

Third time lucky?

Even without considering the breakout, a 18 - 20% run-up towards the downtrend line isn't such a shabby swing trade.



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