There are a number of interesting technical developments on the McDonald’s (MCD) daily chart.
A head and shoulders bullish reversal pattern has been under construction for the last two months. Neckline resistance is situated in the $162 area. This is very bullish potential basing action. A break above the neckline projects a measured upside move which would take the stock to new highs.
As the pattern formation has been progressing, however, the accumulation/distribution line has been tracking lower. This reflects a loss of buying interest. The relative strength indicator is flat reflecting a loss in upside momentum.
In addition, the 50 day moving average is heading lower, on course for a move below the 200 day average, the infamous “death” cross.
But of particular note was the price action in Thursday’s session. A bearish engulfing candle formed and the stock closed down 2%, just off its low of the day. This was despite a 1.3% move higher in the S&P 500 index.
What kind of follow-up we see in McDonald’s, or the broader market on Monday is a guess at this point.