The last two years have been a wild ride for AMC stock bulls, but also a painful one most recently. Could share price finally benefit from a bullish wave next? These graphs may have the answer.
AMC Entertainment stock ( AMC ) - Get Free Report has been in a downward trend after its bull run that ended in June 2021. The stock has formed a descending triangle pattern in its weekly and daily timeframe, with the price making lower highs and lower lows.
The descending triangle pattern is usually considered a bearish continuation pattern with the price breakdown from its horizontal support level. The pattern gets formed when the price falls and bounces but fails to cross its previous swing high, thus indicating control of the bears who eventually push the price below the horizontal support line.
The price has been facing resistance at its 200-day moving average (DMA) and has failed to cross it even after testing multiple times ever since it broke below it in December 2021.
… But AMC May Have Found Support Now
The price can be seen as taking support at around the $3.80 level and was stuck in the range of $3.80-$4.40 for ten trading sessions. Finally, the stock saw a price breakout of the range to close at $4.92 on Jan. 11.
The bulls have gained first control over the bears by making the price breakout of the range and, thus, forming a solid support base.
However, the bulls need to continue to fuel momentum and not let this opportunity slip away. Hence, it becomes important that the price does not fall below the support formed. Otherwise, it would allow bears to take control once again at the time of price breakdown out of the descending triangle.
AMC Stock: All-Clear At $8.30?
The first encouragement for the bulls would be breaking out of the downward trendline and sustaining above it for a few trading sessions. Then, the next important resistance is around $8.30, which also coincides with the 200-day moving average.
An emerging uptrend will only be confirmed once the price moves past and sustains above its 200 DMA and previous swing high of $8.30.
The stop loss for those long on the stock would be around $3.80, which is the base support formed. Moreover, the price breaking out and sustaining above its downward trendline can see the stock moving toward its next resistance at 200-DMA.
However, the long-term uptrend gets established only when the price crosses and sustains above its 200-DMA for a few trading sessions.
A Fighting Chance For AMC Bulls
It is a wonderful opportunity for AMC stock bulls to capitalize on the initial momentum built. Hence, an uptrend may be on its way once the bulls thrive from hereon and knock the bears out of the picture.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)
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