Chipotle had gained just over 20% from the Feb. 8 low before retesting heavy resistance near the November bottom. This key supply zone also includes the one-third retracement level of the massive bear market from the October high to the January low. Chipotle has been fading since, as a pullback from the $532 area develops. For patient bulls, this drift lower will soon create a low-risk entry opportunity.
A further drop from current levels appears likely in the near term. As this plays out, Chipotle investors should keep a close eye on the $485-to-$478 area. This important support zone includes the stock's initial February high near the upper band and the January high near the lower band. A continued light-volume drift down to this area will create a very low-risk buying opportunity. If Chipotle can regain its footing here, a refreshed bull trend could quickly develop.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.