On September 10th, after breaking its medium-term upside support line drawn from low of February 14th with a large downside gap, the McDonalds Corp stock (NYSE: MCD) started moving south, forming lower lows and lower highs. The price continues to move below its short-term downside resistance line taken from the high of September 6th, but recently found some support near the 205.60 hurdle. We will continue to aim for the downside in the short run, but in order to get comfortable with further declines, a drop below that hurdle is needed, hence why we will take a cautiously-bearish approach for now.
Previously, between June 7th and 26th, the 205.60 zone acted as a strong area of resistance, which kept the stock down for a while. But after it got broken to the upside in the end of June, the price had moved higher and hit its all-time high near the 221.90 level. Since then, the stock has fallen all the way to that 205.60 area. This time, the hurdle provided good support and allowed MCD to rebound slightly from it. Looking at the price action now, we can see that the stock is making its way towards that area again. There is a possibility we could see another hold-up near that strong support zone, or even another small correction up. That said, as long as the price stays below the aforementioned downside line, we will continue looking south. If eventually the 205.60 level surrenders and MCD slides lower, the next potential support area to consider is the 202.60 obstacle, a break of which could clear the path to the 200.63 mark. That mark acted as a strong resistance on May 16th, 20th and 21st. Also, it coincides with the stock’s 200-day EMA.
Alternatively, for us to start examining higher areas, a break of the previously-mentioned downside line and a price-push above the 213.40 barrier is required. This way we will aim for the 215.60 hurdle, which is the high of September 26th. Initially, MCD might stall around there, but if the buying interest is still around, more buyers could be joining in and driving the stock to the 220.80 level, marked by the high of September 6th.
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