McDonald’s could slide up to $237 as key resistance holds back the price


Motiur Rahman

May 10, 2022

McDonald’s posted an earnings beat in the first quarter of 2022.

The company’s stock has faced resistance at $255.

Investors should look to buy the stock lower at key support levels.

For about a month, McDonald’s Corporation (NYSE:MCD) has been moving within narrow ranges. The consolidation happens after facing the resistance of around $255. However, the stock has still maintained strengths and avoided quick drops from the consolidation. 

McDonald’s was boosted by a robust quarter result at the end of April. The company reported a revenue of $5.67 billion in the quarter, up from $5.12 billion in the prior year. The revenue also surpassed estimates of $5.57 billion.

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In the company’s outlook, CFO Kevin Ozan said McDonald’s maintained a low to mid-40% operating margin. Ozan believes McDonald’s is well-positioned to counter unprecedented macro pressures. The quarter results emphasised a long-term hold on the stock as it still has room to go higher. But investors and new buyers could need to be a little patient as the stock faces an imminent drop.

McDonald’s faces a correction after hitting resistance at the $255 area

Source – TradingView

Technically, McDonald’s pressure heightened after failing to break successfully past the $255 zone. The stock is currently going lower and could test the minor support of $244 again. The stock could jump from $244, but the established support is at $237. If the current bearish pressure persists, the stock could drop to $237. However, investors need to watch $244 for a potential bullish reversal.

Concluding thoughts

Investors should look to buy McDonald’s based on strong quarterly results and outlook. Although cost pressures continue to be a headwind, McDonald’s provides a robust defensive alternative. Investors should look to buy lower after the current bearish weakness abates. The support levels are $244 and $237.

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