MCD stuck within tight trading range
McDonald's Corporation (MCD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
MCD finished the week 6.1% higher at 184.41 after losing $0.67 (-0.36%) today on low volume, slightly underperforming the Dow Indu. (-0.04%) ahead of tomorrow's Memorial Day market holiday. Trading $0.87 higher after the open, McDonald's was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (MCD as at May 22, 2020):
Friday's trading range has been $2.17 (1.18%), that's far below the last trading month's daily average range of $4.24. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for MCD. Prices continued to consolidate within a tight trading range between 180.57 and 185.48 where it has been caught now for the last three trading days.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Northern Doji which is known as bearish pattern and one neutral pattern, the Doji. The last time a Doji showed up on April 3rd, MCD gained 10.42% on the following trading day.
After trading down to 183.18 earlier during the day, the share bounced off the key technical support level at 184.10 (S1). The failure to close below the support could increase that levels importance as support going forward. After having been unable to move above 185.48 in the prior session, the market ran into sellers again around the same price level today, missing to move higher than 185.35.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the close-by swing high at 185.48 where further buy stops could get triggered. Further buying might move prices higher should the market test April's nearby high at 190.41.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for McDonald's. Out of 450 times, MCD closed higher 59.11% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.11% with an average market move of 0.62%.