Back to the Lows we Go in Chipotle CMG after Big Arc
After a textbook Rounded Arc formation completed in Chipotle (CMG) shares, we now see a return to the prior lows.
Let’s update our charts, note the key price level, and study the pattern:
A big negative momentum divergence – a “Three Push” Pattern – set in on the rally toward $500 per share.
Sellers stepped in and buyers took profits, resulting in the right side of the “Mirror Image” or Rounded Arc pattern highlighted above.
After a successful decline toward the $400 price target, buyers lost the battle this morning as shares collapsed beneath $400 toward the prior low pivot near $370 per share.
While studying the pattern, make a note of what happens next into the $370 target.
We’re seeing a sharp intraday rally “‘up away from” this key pivot, but if it fails, expect additional selling in the context of a much larger downtrend.
Otherwise, buyers have a chance to play an aggressive bounce that emerges from here.
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Corey Rosenbloom, CMT
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