Don't Ignore This Chart!

Mondelez Takes Big Hit, But Remains in Bullish Triangle Pattern

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Mondelez International (MDLZ) had a rough week, tumbling over 5.5% after Kraft Heinz (KHC) made a bid for Unilever (UL).  That suggested to many investors that the likelihood of a MDLZ acquisition was significantly reduced and the stock was priced lower accordingly.  The technical pattern on MDLZ remains quite bullish, however, so I'd argue that last week's weakness is opening a door for entry.  There are two bullish possibilities here so let's look at the chart:

While last week's losses were obvious, the overall uptrend here is just as obvious.  Weekly RSI in the 40-50 range has generally been a solid entry point into MDLZ and we closed at 46 last week.  Furthermore, MDLZ is currently approaching its key trendline support within a bullish ascending triangle pattern.  I'd respect this trendline because failure to hold it could send MDLZ down to its early 2016 reaction low (black dotted line above).  A trip there could establish a test of price support within a bullish rectangular consolidation pattern.  Either way, MDLZ looks bullish to me in the longer-term.  It's just a question of whether the short-term produces additional weakness.  Last week, MDLZ printed a low of 41.30.  That level down to 40.00 would represent solid short-term entry with a closing stop beneath 40.00.

Happy trading!

Tom

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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