by Serge Berger | April 12, 2013 1:14 am
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.
Dunkin’ Brands Group (NASDAQ:DNKN) — Following its July 2011 initial public offering (IPO), this coffee and breakfast chain operator took investors on a bumpy ride for the first eight months of its listing.
A strong rally off the late 2011 lows ultimately retraced exactly 61.8% (an important level for those following Fibonacci study) by August 2012. This August 2012 low acted as a meaningful higher low versus the late 2011 lows, and allowed the stock to climb orderly to current levels.
Along the way, DNKN encountered two speed bumps, one that lasted from October 2012 to January 2013, and the other that lasted from late January to early April. In other words, the rally continues to take place in an orderly fashion, consolidating before the next push higher.
Looking at the daily chart above, we see that the stock recently formed a smaller consolidation pattern that looks ripe to take it to new all-time highs. During the past four trading sessions, DNKN consolidated a big one-day rally from April 5.
That day’s move hurled the stock past the resistance area near $38.30, and therefore, the mini-consolidation period is happening right above previous resistance. A break out of this consolidation phase could move the stock toward the $43 level.
Investors should be aware that the company’s earnings report is scheduled for April 26.
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