Large Symmetrical Triangle in McDonalds (MCD) Weekly Chart

10/05/2009 10:23 am EST

Focus: STOCKS

Corey Rosenbloom

Founder and President, Afraid to Trade

Here's another classic "blue chip" Dow Jones component along with Exxon-Mobil (XOM) that is forming a large-scale symmetrical triangle formation.  Let's take a look at McDonalds' (MCD) weekly stock chart.


Click to Enlarge

I mentioned the Exxon-Mobil (XOM) triangle in two previous posts on my blog at AfraidToTrade.com. I wanted to highlight a similar triangle consolidation with the same implications in McDonalds.

The upper triangle trend line boundary line rests at $58 per share, while the lower line rests near the $55 level.

The moving averages offer absolutely no help (in terms of support and resistance), but do note the intense compression (consolidation) in price.  They show that the "value area," or average price, rests at about the $56 level.

Price has now wound down to an equilibrium level as the apex of the large-scale triangle closes in on price. Like XOM, the expectation is for a price expansion move (impulse) out of the triangle in either direction.

Keep watching price until we get a breakout, and then watch to see if we get an expansion move as expected, which would be a trading opportunity for those who are so inclined.

By Corey Rosenbloom of AfraidToTrade.com

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