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Fan Yang

Papa Johns (PZZA) - Key Support Unreliable as a Rounded Price Top Nears Completion

Papa Johns International $PZZA fell back into its bearish ways in late November/early December after a few months of bullish recovery. I think if price comes back to the August and 2018 low around $38, it will break lower even though this is a key support going back to 2014. 

PZZA Daily Chart

(click to enlarge)

Bearish Continuation:
- On the daily chart we can see that price was in a bullish pullback from August to late November. 
- However, the subsequent dip was sharp and therefore showed us that bears were in charge here. 
- If price starts to anchor below $50 (show resistance around $50), we should anticipate downside to at least test the low around $38.
- If price DOES make it down to $38, I would not rely on this key support anymore. 
- As noted, the most recent price action shows us bears are in charge. 
- There is an overall rounded price top seen on the weekly chart, for which the $38 area is the neckline.
- On the weekly chart, we can see that price has started to hold under the cluster of moving averages (200,100, and 50-week). 
- Finally, the weekly RSI held under 60 for the most part, reflecting the maintenance of the 2017-2018 bearish momentum. 
- Don't be surprised that price reaches a low of $30, or even $25 in 2019. 

PZZA Weekly Chart

(click to enlarge)

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