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McDonald's Earnings Preview: the Must-Know Levels Ahead of Q4 Report

McDonald's reports earnings Thursday morning, and the chart shows two main levels investors should know.

In a busy week of earnings reports, McDonald’s  (MCD) - Get McDonald's Corporation Report is set to report for Q4 on Thursday before the open.

At this week’s low, the Chicago burger giant's shares were down 8.9% from the all-time high set on Jan. 4. That seems like a big move for what’s supposed to be a slow-moving stock. 

But when one considers that the Nasdaq and the S&P 500 were down 18.5% and 12.4% from their respective all-time highs, McDonald’s losses might not seem so bad.

Regardless, the bulls are hoping the earnings report will prevent McDonald’s stock from registering its fourth straight weekly loss.

That’s even with all the headlines lately, such as Tesla’s  (TSLA) - Get Tesla Inc Report Elon Musk wanting McDonald’s to accept Dogecoin

McDonald's Tesla Joke Sends Fake Grimacecoin to the Moon 

Or the company’s global burger battle with Burger King.

And lastly, its new sandwich that may not have customers and a … McRib dessert?

In less than 24 hours, the headlines will be all about the earnings. So let’s look at the chart.

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Daily chart of McDonald's stock.

Daily chart of McDonald's stock.

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On both Monday and Tuesday, McDonald’s stock posted a strong bounce from the lows.

On Monday, the stock was able to close above the 21-week moving average. Not so on Tuesday, but it's back above this measure on Wednesday.

The action has been volatile lately, but McDonald’s stock pretty clearly has been in a downtrend. It has made a series of lower lows and lower highs, while the 10-day moving average has been active resistance.

On a bullish reaction, clearing the 10-day moving average is the first order of business.

Above that, though, opens the door to a far more significant area that I’m watching: $258.50 to $260.

This zone is laced with significant price areas, including last week’s high at $258.46, as well as the 50-day moving average and the 50% retracement near $259.

If McDonald’s stock can clear all these levels and rotate over $260, then I believe the bulls can regain control.

On the downside, keep an eye on this week’s low just above $247.

A break of that mark likely ushers in a test of the 200-day moving average and the December low near $244.

Sometimes, it’s as simple as knowing the key upside and downside levels — like we’re seeing with Microsoft  (MSFT) - Get Microsoft Corporation Report on Wednesday — and seeing how the stock reacts to them.