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Key Takeaways
- Chipotle Mexican Grill shares will likely remain on investors’ radar screens Monday after a week of volatile trading that followed the announcement last Tuesday that CEO Brian Niccol was leaving the company for Starbucks.
- The price formed a bullish hammer candlestick pattern on the highest volume since April 22, 2020 following the CEO departure news, indicating a potential upside reversal.
- Key Fibonacci retracement levels to watch on Chipotle’s chart include 38.2% around $56, 61.8% around $61, and 78.6% near $65.
Chipotle Mexican Grill (CMG) shares will likely remain on investors’ radar screens Monday after a week of volatile trading following the announcement last Tuesday that CEO Brian Niccol was leaving the company to assume the top role at Starbucks (SBUX).
The management shakeup comes at a time when the fast casual chain’s shares have fallen as much as 31% since setting their record high in mid-June as enthusiasm about a recent 50:1 stock split fades and investors brace for a potential slowdown in consumer spending amid a softening labor market.
Below, we take a closer look at Chipotle’s technicals and point out important chart levels to help navigate the stock’s recent price fluctuations.
Hammer Candlestick Emerges Following CEO News
A significant turning point on the chart occurred last Tuesday following the announcement of the CEO’s departure.
Although Chipotle shares still registered a steep drop of more than 7% on the day, the price staged a dramatic intraday reversal, falling to roughly the same level as the Aug. 5 sell-off low, before promptly recovering to close toward the trading session’s high.
The move created a bullish hammer candlestick pattern on the highest volume since April 22, 2020, indicating a potential price reversal to the upside.
Key Fibonacci Levels to Monitor Amid Possible Reversal
If Chipotle shares continue to track higher, investors should eye three Fibonacci retracement levels of particular interest when applying a grid from the stock’s June high to August low.
Firstly, monitor the 38.2% Fib retracement level around $56, a location positioned near a trendline connecting the March 19 pre-earnings gap with several price points situated near last week’s high.
A decisive close above this area could see the shares climb to the 61.8% Fib level near $61, where the price closely aligns with several minor lows between late May and early June,
Finally, further upside could propel a move up to the 78.6% Fib level located near $65. This region also sits in close proximity to a trendline linking a series of comparable trading levels just below the stock’s all-time high (ATH).
Chipotle shares were down 0.1% at $52.40 in premarket trading Monday about two hours before the opening bell.
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As of the date this article was written, the author does not own any of the above securities.