Using technical analysis to easily trade Shake Shack (NYSE: SHAK)
Technical analysis always reveals the markets true intentions. The charts always tell you what you need to know as price movement is a reflection of what buyers and sellers are doing and where the larger trend is headed. Shake Shack has been in a long term downtrend and price has been making lower highs and lower lows ever since its IPO. The best time to enter a trade is during a fresh trend change and the first signal of a trend change occurred through the trend line break.
(Typo: Lower low should say lower high)
As you can see when price is making a lower highs and lower lows, this is a clear downtrend. Once price breaks the trend line and makes a “higher high”, this is confirmation that the downtrend is over an that we are now in an uptrend. This is when you want to start looking for trade entries to trade with the fresh uptrend but you don’t just jump in at the top, you have to wait for a pullback to get in at the best price meaning an area of value. We then had a picture perfect pullback that retested the broken trend line and created a bullish doji candle, which is where we took our trade entry long and as you can see price took off afterwards. Technical analysis and the charts alway reveal everything you need to know about what buyers and sellers are doing, and when we saw the break of the trend line and the higher high, this was confirmation that the sellers and individuals holding this stock short have exited the market and buyers have started entering Shake Shack long.