Reader Request: Chipotle on Multiple Time Frames

By | April 26, 2015

A reader asked if I would take a look at the Chipotle chart:

A large engulfing candle formed on the weekly chart, encompassing the trading range of the previous two months. The 10 week (50 day) and 40 week (200 day) moving averages, along with a long term uptrend line have been penetrated, and the stock closed very near the low for the week. Volume as a percentage of the 50 day moving average of volume was at a level not seen since July of 2012.

4426.CMGweekly

4426.CMGaily

On the daily chart, the broken trend line looks like the neckline of an extended head and shoulders formation. That pattern projects a downside target in the $560.00 area. It remains to be seen if that bearish scenario will play out, but it will take a lot of technical repair before you can get bullish on this stock.

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