Chipotle Stock Breaks Out After Earnings: What's Next?

Chipotle Mexican Grill Inc. CMG shares are trading higher after the company announced better-than-expected second-quarter financial results Tuesday.

The company reported earnings of $7.46 per share, beating the estimate of $6.49 per share. Revenue came in at $1.89 billion, beating the estimate of $1.88 billion.

Chipotle Daily Chart Analysis

• Shares were trading in a sideways channel before the stock was able to break above previous resistance and see a push higher.
• The stock is trading above both the 50-day moving average (green), and the 200-day moving average (blue), indicating the sentiment in the stock is bullish.
• Each of these moving averages may hold as an area of support in the future.

Key Chipotle Levels To Watch

• Chipotle held the $1,560 level as resistance for a while after the stock struggled to cross this level. Now that the stock crossed above this area, it could hold as support.
• If the stock saw a large drop the $1,320 level may hold as a possible strong support, as this area held as support in the past.
• The Relative Strength Index (RSI) sits at 77 and has been rising throughout the last week. The stock has entered the overbought range where there are many more buyers than there are sellers.

What’s Next For Chipotle?

Bulls would like to see the stock continue to break out for a time before the stock sees a period of consolidation. Bulls want to see the stock hold its gains during its period of consolidation. Bulls would also like to see the stock hold above the moving averages.

Bearish traders would like to see the stock fall back below the $1,560 level and begin to hold it as resistance again. Bears would also like to see the stock fall below the moving averages for a potential trend change.

Photo: courtesy of Chipotle.