Don't Ignore This Chart

Texas Roadhouse Might Whet Your Appetite

When money begins rotating to defense in a big way, I look for topping patterns in the market.  But when we're in the midst of a full-fledged bull market - as we are now - I'd much rather search for stocks in bullish continuation patterns.  That brings me to Texas Roadhouse Inc (TXRH).  There is lots to like here, besides the food.  Below features a very strong ascending triangle pattern on TXRH:

The recent equal price highs and rising price lows establish the key points in this ascending triangle pattern.  A high volume price breakout above 51.50-52.00 would likely result in a pattern measurement to 56.50-57.00.  The real beauty here is that TXRH has been showing relative strength vs. its peers over the past six weeks and the restaurant group ($DJUSRU) as a whole has been consolidating in a relative bull wedge pattern during this time frame. 

A relative breakout of this wedge pattern by the DJUSRU that coincides with a price breakout in TXRH would bode very well for continuing strength in the stock.

Happy trading!



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