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Fan Yang

Papa Johns (PZZA) Showing Some Upside Within a Range

Papa Johns International $PZZA has shifted from a bearish trend in 2018 to a sideways one by the turn of the year. 

The daily chart below shows how price rallied sharply in Q4 from a low around $38 to a high around $60 before turning the calendar. 

In 2019, price revisited the low around $38, but has rebounded again, showing resilience at this price point. Price action has flattened.

PZZA Daily Chart

(click to enlarge)

Range:
- The range is essentially between $38 and $60. 
- We saw price bounce off of $38 in January, twice. 
- There a 2-month long price bottom with a neckline at $46. 
- After breaking above $46, price came up to almost $54 before retreating.
- Last week, price found support around $48, which showed respect to the cluster of moving averages.
- Also, the bounce created a bullish engulfing candle.
- Meanwhile, the RSI held above 40 after it was above 70 recently.
- These are all signs that the market is still bullish in the short-term.
- This short-term bullish outlook will be limited by the medium-term sideways market, which has resistance at $60.
- Still I think PZZA still has a potential 20% gain from the past week's close of $49.26.
- A break below $45-$46 would likely invalidate this bullish outlook and put pressure back to $40, $38 area. 

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