AMC Entertainment Holdings Co., Ltd. AMC It was trading about 8% higher on Tuesday after a very bearish day on Monday sent the stock plummeting about 15%.
The company announced plans to sell up to 425 million units AMC Preferred Stock Unit ape, put pressure on both AMC and APE. Through the Stock Distribution Agreement, AMC may repay, refinance, redeem or repurchase accrued debt to meet its financial goals.
A high opening that put the AMC in the middle of Monday’s trading range created an inside bar on the stock chart.
An inner bar pattern indicates a period of consolidation, usually followed by continued movement in the direction of the current trend.
Inside bar patterns are more effective on longer timeframes (4-hour charts and above). A pattern has at least two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more candlesticks. Subsequent candlesticks must be completely within the range of the mother bar, each called an “inside bar”.
A double or triple inside bar is stronger than a single inside bar. After the inside bar pattern breaks, the trader wants to monitor the high volume to confirm that the pattern has been recognized.
- Bullish traders will want to look for inside bar patterns in uptrending stocks. Some traders take positions on the inside bar before the break, while other aggressive traders take positions after the break of the pattern.
- For bearish traders, it is important to spot inside bar patterns in downtrending stocks. Similar to the bull trader, the bear has two options as to where he should position to break the pattern. For a bearish trader, the pattern will be invalidated if the price rises above the high of the mother candlestick.
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AMC Entertainment Charts: The rebound to the inside bar pattern could be due to AMC’s Relative Strength Index (RSI) dropping into oversold territory at the 30% mark on Monday. When the stock’s RSI approaches or hits that level, it is oversold and could be a buy signal for technical traders.
- Investors can see a breakup or down from Monday’s mother bar with higher-than-average volumes to give an indication of future direction. If the break from Monday’s range doesn’t happen later on Tuesday, the stock could continue to hold sideways in decreasing volume for a period of time before choosing a direction.
- If AMC pulls away from Monday’s mother bar, the stock could return to the 8-day exponential moving average (EMA), giving confidence to bullish traders. The 8-day EMA has acted as a strong resistance, pushing the stock down since Sept. 16.
- AMC finds resistance above $7.47 and $8.51 and support below $6.33 and $5.23.
See also: The Right Time: Buy Puts During Market Peaks.Sell puts during peak demand on Friday
Photo: TY Lim via Shutterstock
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