First Look At The APE Chart As AMC Entertainment Preferred Equity Units Begin Trading

Zinger Key Points
  • Patterns that develop on smaller time frames take a short period of time to play out.
  • APE units have developed resistance at $7.63 and $8.21 and support at $6.75 and $6.08.

AMC Entertainment Holdings, Inc AMC Preferred Equity APE began trading on Monday, opening at $7.01 and surging to $10.46 within the first 30 minutes of the market open before entering into a sharp decline. APE units were halted several times intraday due to the high level of volatility.

When a security first begins trading publicly, the stock or crypto is often volatile, as traders rush in to buy and then sell for quick gains. Investors who received one APE share for each AMC Entertainment Holdings, Inc AMC class A common stock held at the close of business on Aug. 15 had to make quick decisions on Monday: whether they would sell their Preferred Equity units, hold them or add to their positions.

For technical traders, a newly trading stock takes time to develop patterns and areas of support and resistance, making charting more difficult and less reliable, especially on larger time frames. For APE units, the 15-minute chart has the most information available Tuesday.

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The APE 15-minute chart: Traders using smaller time frames for technical analysis should remember that when a stock reacts to a pattern on the 15-minute chart, it will have a reaction that only lasts for a short period of time.

For example, a bullish reaction to a bull flag on a 15-minute chart may only last for half an hour, whereas the reaction to a bull flag pattern on the daily chart could take days to play out. For this reason, charting on smaller time frames is favored by scalpers and intraday traders.

  • After gapping up to start Tuesday’s trading session and surging an additional 8% off the open, APE units entered into a period of consolidation. The consolidation is taking place on decreasing volume, which indicates trading is normalizing and the stock is developing more solid areas of support and resistance between about $6.60 and $7.50.
  • Beginning at 11:45 a.m., APE units began trading in a sideways pattern, forming a series of lower highs and higher lows. Eventually APE units will break up or down from the sideways pattern and enter into either an uptrend or a downtrend, which will help traders to gauge future direction.
  • AMC units has carved out some weak areas of resistance above at $7.63 and $8.21. Some support has developed below at $6.75 and $6.08.

Photo via Shutterstock. 

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