Red Robin Gourmet Burgers (RRGB) has been in a downtrend for a year. The stock price has been cut to $45 from $95 but this discount and exercise in "portion control" has not yet attracted buyers to the stock.
In this daily chart of RRGB, above, we can see the persistent trend lower for prices the past 12 months. Prices recently popped above the 50-day moving average line but the trend of the average line is flat at best. Prices are below the declining 200-day moving average line.
The On-Balance-Volume (OBV) line has been trending lower all year and suggests that sellers of RRGB have been more aggressive than buyers. There is a bullish divergence on the chart above -- prices made lower lows in May, July and August while the 12-day momentum study made higher lows.
At times, a slowing momentum picture can foreshadow a turn to the upside. Can the recent up-move in RRGB continue? Sure, but notice the zone of resistance overhead in the $55 to $70 area. This resistance zone is likely to keep a lid on price advances.
In this weekly chart of RRGB, above, we went back five years to show where prices might go if prices continue their downtrend. RRGB is below the declining 40-week moving average line so we would want to trade in that direction for now.
The OBV line on a weekly time frame has been trending lower for more than a year and suggests some significant liquidation. When RRGB broke its 2014 lows it opened up the possibility that the next leg lower could reach the $35-$30 area -- the next longer-term support area on the chart.
There is one bright spot on the chart -- as prices made lower lows this year the weekly momentum study has made equal lows. This bullish divergence could produce a rally or the divergence may just continue longer.