Technical Analysis – McDonalds stock retreats after posting multi-month high near 200.00

Melina Deltas, XM Investment Research Desk

McDonalds’ stock price has been making higher highs and higher lows since August 2018, creating an upward tilting channel. In the short-term, prices moved lower after the pullback on the multi-month high of 200.00 on April 30. The technical indicators are sending bearish signals, suggesting softness in the market in the near term.

The RSI has found strong resistance in the overbought level and slipped below 70, indicating that the market could weaken a little bit in the short-term until the index falls below that threshold. The MACD oscillator posted a bearish crossover with its trigger line in the bullish area, confirming negative retracement as well.

Should prices decline, immediate support could be found around the 191.00 support level, identified by the peak on April 8, while a move lower could hit the 50-day SMA around the 23.6% Fibonacci retracement level of the upleg from 146.65 to 200.00 around 187.33. Then a leg below that level, the stock could meet the 38.2% Fibonacci of 179.53, a barrier below the rising channel.

However, if the market manages to pick up speed, the 200.00 psychological area could offer nearby resistance ahead of the return line of the channel around 205.00.

In the medium-term, the outlook remains positive since prices hold above all the moving average lines and a bullish cross is still in place between the 50- and the 200-day SMAs.