Stock of the day: McDonald's

McDonald’s awaits this data with a very handsome bullish setup, which most probably, could have been easily triggered by a good earnings report. This setup is a wedge in an uptrend. Wedge (red lines) is a trend continuation pattern and represents the most recent bearish correction that started at the beginning of November. In theory, the wedge should end with a breakout to the upside, which in the case of the McDonald’s would also mean new yearly highs.

Chances for a bullish scenario are pretty high and this is our base scenario. On the other hand, a weaker earnings report can extend the bearish correction a bit more. In that case, the key support is the 38,2% Fibonacci and as long as we are above, the sentiment is positive but a breakout to the downside would bring us a proper signal to sell.