Monster Beverage (MNST) was a triple from its early 2013 lows but the trend of prices turned sideways last year with prices swinging with higher highs and lower lows. This possible broadening formation could set up a big move lower unless this pattern becomes a continuation pattern. Let's dig deeper.
This daily chart of MNST, above, shows how prices have swung up and down since mid-year -- a move to a new high in December that failed and a move to a new low in February that lacked follow-through. Throughout all these ups and downs the On-Balance- Volume (OBV) line has managed to trend lower. A declining OBV line happens when the volume of shares traded on days when MNST closed lower are heavier than when MNST closed higher. The slope of the 50-day average line has turned positive but the 200-day line is flat. In the bottom panel we lack any bullish or bearish divergences.
In this weekly chart of MNST, above, we can see the broadening pattern better. Prices are above the flat 40-week moving average line but notice that the flat OBV line is not moving to the upside in advance of a price breakout. In the bottom panel is the weekly momentum study and while it isn't showing a bearish divergence between price and momentum it does show that momentum may have peaked.
A close below $140 on MNST will look bearish and potentially trap a lot of new longs.