AMC stock analysis: will the stock rise from the ashes again?

The AMC Entertainment stock analysis shows the stock has bottomed out and it may offer buying opportunities for long-term investors

AMC Entertainment is the largest movie theatre chain in the United States. The lockdown during the pandemic severely affected its operations as people stayed indoors and studios released movies on streaming platforms.

However, with the arrival of coronavirus vaccines, the economy has been opening up and AMC announced on March 17 that it will have 99 per cent of its US locales open by March 26. While this is a positive for the company, the theatres will be running at limited capacity due to social distancing norms in place. Still, it is better than keeping the theatres closed.

AMC had warned its investors in October 2020 that it may have to file for Chapter 11 bankruptcy due to a shortage of liquidity. However, the massive rally fuelled by the subreddit group WallStreetBets helped AMC to raise liquidity and avoid bankruptcy.

The next stage of AMC’s recovery will depend on whether the cinema lovers watch the movies in theatres or prefer to stay home and view them on various streaming platforms. 

While this is difficult to predict, the big question is: will AMC stock go up? Let’s perform the AMC Entertainment stock analysis of the weekly chart to find out.

AMC Entertainment stock technical analysis – weekly chart

AMC Entertainment’s share price had been in a long-term downtrend, falling from $35.45 in December 2016 to $1.89 in early January of this year. That is a massive drop of 94.66 per cent.

However, the price broke above the downtrend line with strength in mid-January and rallied to $19.69 at the end of January, recording a rise of 941.79 per cent within a few days.

Although the price dipped from $19.69 to $5.21 during volatile trading, the positive sign is that the bulls held the 20-week EMA. The moving averages have started to turn up and the relative strength index (RSI) is in positive territory, indicating the bulls have the upper hand.

The AMC share price analysis of the weekly chart shows the downtrend is over and the stock may be ready to start a new sustained uptrend. Let’s perform the AMC stock price analysis of the daily chart to spot the critical levels and determine the short-term trend.

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AMC Entertainment stock technical analysis – daily chart

The AMC Entertainment stock price has formed a symmetrical triangle on the daily chart, which suggests indecision among the bulls and the bears. The flat 20-day EMA and the RSI near the midpoint also indicate a balance between supply and demand.

If the bulls can drive the price above the triangle and the $14.39 resistance, a retest of $19.69 is possible. A breakout of this level will open up the doors for a possible rally to the pattern target at $30.

Conversely, if the bears sink the price below the triangle, the stock could drop to $5.26 where buyers may step in. So, is AMC Entertainment a good stock to buy? Let’s find out.

AMC stock buy or sell at these levels

The AMC Entertainment stock analysis shows that the downtrend is over but the stock has been very volatile in the past few days. There are a few trading opportunities that may be attempted.

Long-term investors may accumulate the stock between $6 and $8.86 and keep a stop-loss at $4.80. They can book partial profits if the stock rallies to $14 and hold the remaining positions with a trailing stop-loss.

Short-term traders may buy on a breakout and close above the triangle with a tight stop-loss. 

Trade AMC Entertainment – AMC share price

AMC Entertainment Holdings Cl A
Daily change
7.55
Low: 7.04
High: 7.55

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FURTHER READING: Boeing stock price analysis: the stock may start a new uptrend within the next month

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