If AMC Breaks Resistance In This Pennant Pattern, Shorts Could Be Toast

AMC Entertainment Holdings Inc. AMC shares are trading higher Monday, likely in anticipation of the company’s third-quarter earnings results after market close. Earlier, the company announced it will team with Walt Disney Co. DIS to bring back four fan-favorite movies from Nov. 12-14 at more than 200 AMC locations.

AMC Entertainment was up 6.47% at $44.40 at press time.

See Also: AMC Teams With Disney On 'Surprise Screenings' In Conjunction With Disney+ Day

AMC Entertainment Daily Chart Analysis

• The stock has been running toward resistance in what technical traders call a pennant pattern.
• The stock is nearing the end of this pattern and could see a push upward if it breaks above resistance. If unable to break resistance, the stock could move down if support is broken.
• The stock trades above both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock is likely in a period of bullish sentiment.
• Each of these moving averages may hold as an area of support in the future.
• The Relative Strength Index (RSI) has been climbing higher the past couple of weeks and now sits at 64. This is nearing the overbought area where the stock would be seeing a much greater amount of buying pressure compared to selling pressure.

What’s Next For AMC Entertainment?

Bulls in AMC are looking to see the stock break out above the pennant pattern and start to move higher. If the stock is able to break above the pattern resistance, it could get many short sellers to start covering their positions, as the possibility of a large bullish move following a pennant break is likely.

Bearish traders would like to see the stock fall below the pattern support. A dip below pattern support with a period of consolidation could let a further bearish push happen in the future.