Despite declining revenues in the last several years, McDonald’s Corporation (NYSE:MCD)’ profits are still on the rise. The company’s stock was also climbing until late-January 2018, when it reached an all-time high of $178.68. But instead of going for the $180 mark, the bulls could not maintain the positive momentum. A little over a month later, MCD was down to $146.85 a share on March 2nd. After a swift rally to $163.22, McDonalds stock is currently hovering around $157. In order to extract the meaning of all these seemingly random figures, we need to put our Elliott Wave glasses on and see if a recognizable pattern would emerge.
The hourly chart of McDonalds stock shows that the February decline was a simple A-B-C zig-zag correction with a triangle in the position of wave B. Note that wave “e” of B breaches the upper line of the pattern by a large margin, but does not exceed the high of wave “c”. Triangles precede the final wave of the larger sequence. Here, the final wave is C, which terminated at $146.85, thus completing the entire corrective decline.
The structure of the following recovery is confirming the positive outlook. It comes in the form of a five-wave impulse, labeled i-ii-iii-iv-v in wave 1. The recent pullback from $163.22 should be wave 2, which suggests McDonalds stock is now ready to conquer $180 in wave 3. The bulls should not give up as long as the share price stays above the starting point of the impulse pattern.
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