Stock of the day: McDonald’s

On the last day of June, we’re analysing the situation on MCD – McDonald’s. Up until now there’s been no trading signal yet, but we’re about to get one so it’s better to know in advance and be prepared, rather than after the fact.

Since the beginning of the year, MCD has been inside the symmetric triangle pattern (black). That’s a sideways trend formation, where the volatility drops over time. What’s important here is that we are approaching the end of the triangle, which in theory means that the price has to decide if it wants to break to the upside or downside.

Breakouts from triangles are usually reliable and have big momentum. Currently, the price is testing the upper line of this pattern but taking the general sentiment worldwide into consideration, it’s hard to imagine that we’ll get a bullish breakout here soon. Nevertheless, that’s also an option.

So how would one trade the current situation? The price breaking the upper line of the triangle will bring us a buy signal and the price breaking the lower line of the triangle will bring us a signal to sell. As for now, we patiently wait for a proper signal.