December 12 Chart of the Day - Commercial Metals Company
Precision oriented price action technical analysis by far provides the best edges and most setups for traders and investors across the markets so that's what we use for the basis of our reviews
According to published reports, UBS has issued a double downgrade for Commercial Metals Company (CMC), lowering its rating from "Buy to Sell".
The downgrade comes as part of a broader assessment of the steel sector, with UBS noting that the industry's risk-reward profile has become "less compelling" and more "balanced."
In the same sector review, UBS also downgraded two other companies from "Buy to Neutral."
Maybe these analysts know price action technical analysis and are on to something...
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Monthly Chart
On the monthly chart we can see that after tagging a -23.6% Fibonacci bull extension level and setting its $64.53 ATH earlier this month price has starting falling lower as traders and investors began to take profits.
Those in the know realize that a bull -23.6% level represents a price profit target and not a trade entry level. They also realize that technically speaking price could keep going higher...
It's not unusual for price to retreat back towards previous price structure after establishing new highs regardless of any analysts news.
Now, with little to no previous price history at these levels price is going through what we like to call a "discovery phase" to create new structure. As traders we're limited to estimating potential upside targets using only price action tools Trend and Fibonacci as shared for free in our Trading All Time Highs webinar replay.
Weekly Chart
On the weekly chart we can see with much more clarity the sudden drop price made at precisely the -23.6% target.
Should price decide to continue falling to the downside it may want to revisit a previous ATH support level around $58. If the bulls decide not to step in there then price may want to visit a multi year trend line down near $50.
The only guarantee in the markets is that price cycles. It cycles up and it cycles down across all time frames and all charts and rarely, if ever, moves in a straight line.
Only time will tell for sure what price will do next...
We've layered in traditional Fibonacci levels as well as support/resistance and trend to help identify potential price levels of interest and/or future price targets.
Armed with precision oriented charts like these both traders and investors can formulate their respective plans.
So what's next?
We don't make predictions...
Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.
- Support/Resistance
- Trend
- Fibonacci
- Supply/Demand Zones,
- Change Control Zones
ChartPros provides the exact methodology in its price action technical analysis courses to create charts like this with the most precise and accurate levels from which investors and traders can formulate their respective trade plans.
Take a look at the charts and let us know what you think. We'd like to hear from you in the comments sections.
