Is AMC Entertainment Gathering Strength To Swing Higher? Here’s What To Watch – AMC Entertainment (NYSE:AMC)

AMC Entertainment Holdings, Inc MC Thursday opened slightly higher before declining on below-average volume.

The reduced volume indicates that a period of consolidation is taking place, which was likely to happen because the stock rose nearly 18% between October 18 and Wednesday.

AMC’s stability is taking the form of an inside bar pattern on the daily chart. An inside bar is often followed by a continuation move in the direction of the current trend.

An inside bar pattern is more accurate on larger time frames (four-hour chart or larger). The pattern consists of at least two candlesticks and consists of a mother bar (the first candlestick in the foot) followed by one or more candles. Subsequent candles must be completely within the range of the parent bar and each is called an “inside bar”.

A double, or triple inside bar can be more powerful than a single inside bar. After an internal bar pattern breaks, traders want to see higher volume to confirm the pattern was recognized.

  • Bullish traders will look for inside bar patterns on stocks that are in an uptrend. Some traders may take positions during the inside bar before the break while others will take positions after the break of aggressive trading patterns.
  • For bearish traders, finding an inside bar pattern on a stock that is in a downtrend will be important. Like bullish traders, bears have two options on where to position to play the pattern break. For bearish traders, the pattern will go wrong if the stock rises above the high of the mother candle.

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AMC Chart: AMC’s inside bar is bullish because the stock was trading higher before the pattern formed, and because the candle formed near the upper limit of Wednesday’s mother bar. The inside bar may help AMC regain the 21-day exponential moving average (EMA) to gather strength as support, which the stock has tried and failed to do over the past two trading days.

  • On October 21, AMC regained the eight-day EMA as support and the indicator has helped guide the stock higher since that date. If the AMC is able to recover the 21-day EMA in the coming days, the eight-day EMA will cross above the 21-day, which will give traders more confidence going forward.
  • AMC is trading in an uptrend, the most recent high was $6.05 on October 19th and the most recent high was $7.11 on Wednesday. If the AMC breaks on Thursday or Friday after Wednesday’s mother bar, the next high will print to indicate that the uptrend is intact.
  • If AMC breaks bearishly from the mother bar, bullish traders can look for a bullish reversal candlestick, such as a doji or hammer candlestick, to print above $6.10 for a possible entry. Bearish traders want to see the AMC break above the mother bar and then cause the stock to print lower to increase bearish volume.
  • AMC has resistance above $7.47 and $8.51 and support below at $6.33 and $5.23.

See also: Short seller Carson Block says Matt Waters watches this metric closely as a result of historic game-stopping short squeezes

Image via Shutterstock.

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