A look into Shake Shack's Macro Trend, Bullish or Bearish?
Hi guys! This is a Macro analysis into Shake Shack (SHAK).
We will assess various developments occuring in the charts, shedding some light into whether we are in a bullish or bearish overall trend.
The analysis is done on the 1 Week timeframe.
When looking at the Price action of Shake Shack.
We have recently been REJECTED from a Major Resistance Trendline (RED line).
This line has been acting as resistance since Feb. 2021.
NOTE: This trendline indicates our current TREND. That is we are in a downtrend until proven otherwise. That proof is breaking ABOVE and CONFIRMING Support on this RED line.
Also NOTE: This is our 2nd touch point of this RED line. In trendline theory it states that atleast 3 or more touches are required on trendlines for them to weaken enough for a break to the opposite side.
So it makes sense that It has pushed us into another downtrend that has recently broken down below the 21 EMA (Purple moving average).
We are now rapidly approaching a SUPPORT test on the 50 SMA (Green Moving Average).
It is crucial we find SUPPORT on the 50 SMA and Horizontal Black Support line.
If we can't we risk falling to the "Major Support Trendline".
Which also risks another DEATHCROSS. Notice the slight downward curve on the 21 EMA.
Having a DEATHCROSS occur can bring in momentum to even push Prices below the "Major Support Trendline".
Our MACD indicator has also CROSSED Bearish with signficiantly increasing RED histogram bars. This signifies an increase in bearish momentum.
To maintain Bullish trend, we need to stay ABOVE the 0 level on MACD and have a BULL cross with the print of GREEN histogram bars.
We also MUST maintain Support on the 50 SMA, eventually CONFIRMING Support ABOVE 21 EMA.
Notice also the GOLDEN CROSS between 21 EMA and 50 SMA, as long as we maintain SUPPORT Above 50 SMA, this has the momentum to maintain an UPTREND.
It can also help us breakout through the Major Resistance Trendline.
Also take a look for reference at our previous REJECTION of this Major Resistance Trendline.
(Orange arrow)
Notice how we ended up testing Support on Green 50 SMA, bounced upwards but ended up coming back down and breaking down, printing the death cross and falling 72%. There is nothing saying that we cant do a similar move but theres also no way of knowing that it will play out exactly as past history.
Thats why we need to be level headed and take it 1 step at a time.
So in the coming weaks our current direction of price action is to TEST SUPPORT on the 50 SMA and the Black line Support CONFLUENCE first.
This area is CRUCIAL area that will determine whether we go back to RE-TEST either:
1. RED Major Resistance Trendline above.
2. BLACK Major Support Trendline below.
If we re-test the REDline that will make 3 touch points, and we will need to observe whether or not we break through.
If we re-test the Black Major Support trendline, we risk breaking down which may cause further price declines. But note its a Major Historical Trendline so it can make monumental buying opportunity provided we get back down there.
__________________________________________________________________________________
Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again.
Stay tuned for more updates on SHAK in the near future.
If you have any questions, do reach out. Thank you again.
DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. Do not use my ideas for the basis of your trading strategy, make sure to work out your own strategy and when trading always spend majority of your time on risk management strategy.
We will assess various developments occuring in the charts, shedding some light into whether we are in a bullish or bearish overall trend.
The analysis is done on the 1 Week timeframe.
When looking at the Price action of Shake Shack.
We have recently been REJECTED from a Major Resistance Trendline (RED line).
This line has been acting as resistance since Feb. 2021.
NOTE: This trendline indicates our current TREND. That is we are in a downtrend until proven otherwise. That proof is breaking ABOVE and CONFIRMING Support on this RED line.
Also NOTE: This is our 2nd touch point of this RED line. In trendline theory it states that atleast 3 or more touches are required on trendlines for them to weaken enough for a break to the opposite side.
So it makes sense that It has pushed us into another downtrend that has recently broken down below the 21 EMA (Purple moving average).
We are now rapidly approaching a SUPPORT test on the 50 SMA (Green Moving Average).
It is crucial we find SUPPORT on the 50 SMA and Horizontal Black Support line.
If we can't we risk falling to the "Major Support Trendline".
Which also risks another DEATHCROSS. Notice the slight downward curve on the 21 EMA.
Having a DEATHCROSS occur can bring in momentum to even push Prices below the "Major Support Trendline".
Our MACD indicator has also CROSSED Bearish with signficiantly increasing RED histogram bars. This signifies an increase in bearish momentum.
To maintain Bullish trend, we need to stay ABOVE the 0 level on MACD and have a BULL cross with the print of GREEN histogram bars.
We also MUST maintain Support on the 50 SMA, eventually CONFIRMING Support ABOVE 21 EMA.
Notice also the GOLDEN CROSS between 21 EMA and 50 SMA, as long as we maintain SUPPORT Above 50 SMA, this has the momentum to maintain an UPTREND.
It can also help us breakout through the Major Resistance Trendline.
Also take a look for reference at our previous REJECTION of this Major Resistance Trendline.
(Orange arrow)
Notice how we ended up testing Support on Green 50 SMA, bounced upwards but ended up coming back down and breaking down, printing the death cross and falling 72%. There is nothing saying that we cant do a similar move but theres also no way of knowing that it will play out exactly as past history.
Thats why we need to be level headed and take it 1 step at a time.
So in the coming weaks our current direction of price action is to TEST SUPPORT on the 50 SMA and the Black line Support CONFLUENCE first.
This area is CRUCIAL area that will determine whether we go back to RE-TEST either:
1. RED Major Resistance Trendline above.
2. BLACK Major Support Trendline below.
If we re-test the REDline that will make 3 touch points, and we will need to observe whether or not we break through.
If we re-test the Black Major Support trendline, we risk breaking down which may cause further price declines. But note its a Major Historical Trendline so it can make monumental buying opportunity provided we get back down there.
__________________________________________________________________________________
Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again.
Stay tuned for more updates on SHAK in the near future.
If you have any questions, do reach out. Thank you again.
DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. Do not use my ideas for the basis of your trading strategy, make sure to work out your own strategy and when trading always spend majority of your time on risk management strategy.
