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AMC Entertainment Holdings asset management company It opened slightly higher on Thursday before falling on below-average volume.
A drop in trading volume indicates a period of consolidation is taking place, which is likely to happen because stock It surged nearly 18% between Oct. 13 and Wednesday.
The integration of AMC is based on Inner strip pattern on the daily chart. Inside bars are usually followed by a continuous movement in the direction of the current trend.
Inside bar patterns are more effective on larger timeframes (four-hour charts or larger).The pattern has at least two candlesticks and consists of a parent bar (the first candlestick in pattern) followed by one or more subsequent candles. Subsequent candles must be completely within the bounds of the parent bar, and each candle is called an “inner bar”.
A double or triple extension is more powerful than a single extension. After a breakout of an inside bar pattern, traders want to observe high volume to confirm that the pattern has been identified.
- Bullish traders will want to look for inside patterns in stocks that are in an uptrend. Some traders may open positions during the inside bar before the breakout, while other aggressive traders will open positions after the breakout pattern.
- For bearish traders, finding an inside line pattern on a stock that is in a downtrend will be key. As with bullish traders, bears have two options as to where to open a position to break the pattern. For bearish traders, the pattern is invalid if the stock rises above the top range of the parent candle.
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AMC chart: AMC’s inside bar is bullish as the stock trades higher before forming the pattern and as a candlestick forms near the upper limit of Wednesday’s parent bar. The inside bars may be helping AMC gather strength to regain support at the 21-day exponential moving average (EMA), which the stock has tried and failed to do over the past two sessions.
- On Oct. 21, AMC regained support from its eight-day moving average, an indicator that has helped guide shares higher since that day. If AMC can regain its 21-day SMA in the next few days, the 8-day SMA will break above the 21-day SMA, which should give bullish traders more confidence in the future.
- AMC is in an uptrend with the most recent higher low at $6.05 formed on October 19 and the most recent higher high at the $7.11 mark on Wednesday. If AMC breaks out from Wednesday’s parent bar late Thursday or Friday, it will print the next higher high, indicating that the uptrend is intact.
- If the AMC is bearish from the parent bar, bullish traders can watch for a bullish reversal candlestick, such as a doji or hammer candlestick, printed above $6.10, for a possible entry. Bearish traders want to see AMC break out from the bus bar and then increase the bearish volume to get the stock to print lower lows.
- The upper resistance of AMC is at $7.47 and $8.51, and the lower support is at $6.33 and $5.23.
Image via Shutterstock.
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