Chipotle Mexican Grill, Inc. (ticker: CMG) has been a mover and shaker lately, especially since the stock price has nearly tripled in less than two years. As it turns out, CMG might be on the verge of another price swing, which we may be able to take advantage of.
The chart below shows a 60-minute timeframe of CMG with the Camarilla pivots exposed. Notice that price has held within the boundaries of a tightly-formed one-week trading range, which spans from $148 to $155.50. This factor alone indicates that price is ready to move once direction is decided.
What makes this opportunity particularly interesting is the fact that this consolidation has formed precisely between the H3 and H4 pivot levels.
If you are not versed in the Camarilla Equation, read this brief article “The Camarilla Equation Explained”.
Basically, H3 is considered a level to sell the market, while H4 is considered a pivot to buy the market. Therefore, a breakout in either direction from the current consolidation pattern will have pivot confirmation.
But wait…there’s more! (sorry, couldn’t help myself). Chipotle is also holding beneath the upper boundary of a three-month uptrending channel, which gives us an additional technical pattern to base our entry from.
If the upper boundary of the channel remains unbroken, and H4 resistance holds, we could see a downside reversal that leads price back toward the bottom of the channel at about $141, or maybe even back to L3 support at $135.50, which was tested earlier in the month.
Watch for confirmation below $149 to trigger short entries.
If price decides to push through the top of the channel, and through H4 resistance at $156, there’s “clear air” above to the H5 Breakout Target at $170.85.
Let’s see how this one shakes out!
P.S. All of this talk of Chipotle is giving me a craving for one of their delicious barbacoa burritos!
¡Buen Provecho!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss