Watch These Chipotle Price Levels as Stock Jumps After Strong Earnings Report

Shares in fast casual restaurant Chipotle Mexican Grill (CMG) jumped more than 4% in extended trading Wednesday after the burrito maker served up second quarter results above Wall Street’s expectations, as demand for the chain’s menu items allowed it to avoid lowering prices, helping to sustain revenue growth.

Below, we take a closer look at the technicals on Chipotle’s chart and point out important price levels to watch out for amid a post-earnings pop.

Chart Sets Stage for Earnings-Driven Bounce

Since forming a bear trap pattern after setting a record high in June, Chipotle shares have had a correction of around 24% on above-average volume. However, the shares appear to have found buying interest near a trendline linking a February pause in the stock’s longer-term uptrend and the closely aligned 200-day moving average.

It’s also worth pointing out that the relative strength index (RSI) recently moved into oversold territory below the closely watched 30 threshold for only the fourth time over the past year, setting the stage for an earnings-driven pop from this key support area.

Monitor These Key Overhead Chart Levels

If Chipotle shares stage a post-earnings recovery, investors should monitor three key levels where the stock may run into overhead resistance.

The first area to watch sits around $57, a location on the chart where sellers who bought the dip may be happy to lock in profits near price consolidation that formed as part of the stock’s trending move between October 2023 and June this year.

A close above this level could see a move up to the key $61 level, where the shares would likely face a confluence of resistance from the downward sloping 50-day MA and a horizontal line linking a series of price points from late April to early July. This area also roughly lines up with the 50% Fibonacci retracement level using a grid stretched from the June high to July low.

Finally, an extended bullish move in the stock could drive a rally to around $65, just 6% below the all-time high (ATH), near a trendline sitting above a narrow range of price action between April and May.

Chipotle shares gained 4.4% to $54.04 in after-hours trading Wednesday.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.