Monster Beverage (MNST) has rallied to the top of a trading range and it looks like we can have a breakout on the topside. Volume and price are the energy drink of the chartists so let's check on the trading pattern for MNST.
This daily chart of MNST, below, shows a potential base pattern. In November through early March declines in MNST to $42 and below found buying interest. Prices gaped to the upside in early March, jumping above the 50-day moving average line and stopping at the underside of the declining 200-day moving average line. Prices slowly moved lower the next two months and this month surged back to the top of the trading range around $48-$49. The rally so far this month put MNST above the 200-day average line.
The daily On-Balance-Volume (OBV) line was steady/firm from November and has turned up to a new high this month. A rising OBV line is a sign of more aggressive buying and can mean that prices are supported enough to break out of the trading range. The Moving Average Convergence Divergence (MACD) oscillator is turning up above the zero line for a cover shorts and outright go long signal.
In this weekly bar chart of MNST, below, we can see that prices just rallied above the declining 40-week moving average line. MNST has been in a trading range or consolidation pattern since early 2015. The weekly OBV line moved up with prices to a July 2016 peak and has declined modestly. Since November the OBV line has been neutral but shows a slight improvement in April. The weekly MACD oscillator crossed to a cover shorts buy signal in February and is almost above the zero line for an outright go long signal.
In this Point and Figure chart MNST, below, we can see the two-year consolidation. A trade at $49 will be a short-term upside breakout for MNST and could lead to new highs and gains to $60.
Bottom line: Aggressive traders could go long MNST on a close above $49 and risk a close below $46. our upside price targets are $54 and then $60.
