During the Friday session, McDonald’s Corporation (NYSE:MCD) pulled back in order to test the $120 level, but found enough buying pressure at that region to form a hammer. This is one of my favorite trading signals, a hammer at an area that has shown support in the past. McDonald’s looks supported by not only the psychological aspect of the round number and former action, but the 61.8% Fibonacci retracement level as well. The level is often where a lot of traders will get involved, so I think that a bounce is likely.
Remember, McDonald’s is considered a safety play of sorts, as the economy in America is struggling, as shown by the anemic jobs number on Friday. When you aren’t working – food needs to be cheap, and I think this is another reason to suggest that traders may be attracted to this stock. Because of this, a bounce makes sense as well, as CFD traders will be looking at this market on Monday due to the technical set up. I think that a run to the $131 level is possible, but remember this is an investment, not a scalp. You have to be able to deal with the volatility that we will see from time to time as we grind higher. I think it could take several weeks to get there, but these types of trades are what makes for a good year. Nice and steady wins the race.
McDonald’s should continue higher
The stock should in conclusion grind higher, and I think that you will have several opportunities to get involved. My favorite strategy with a situation like this is to buy a little bit more every time it pulls back, and in small increments. I would start out with a small position, and simply add a few shares every time we see signs of ‘value’ in this marketplace. I think that the overall look of indices in America is strong right now, and this should continue right along with them. However, the strength in those indices probably has more to do with the idea that interest rates will remain very low in the USA for some time. This market is more about people having less income.
