Don't Ignore This Chart

Texas Roadhouse Might Whet Your Appetite

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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!

Tom

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Tom Bowley
About the author: co-founded Invested Central and served as the site's Chief Market Strategist for more than 10 years. His unique trading style combines both his fundamental and technical strategies to systematically manage risk while trading. A regular contributor to StockCharts.com's bi-weekly ChartWatchers newsletter since 2006, Tom's role at StockCharts has expanded significantly since he joined the company as a full-time Senior Technical Analyst in March of 2015. Learn More
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