Cineworld Shares Are Up 5.6% Today, Can They Break Above 6-Month Resistance?

Shares of Cineworld Group plc (LON: CINE) 5.6% today but they are trading near a six-month resistance level as seen on the weekly chart at the bottom.

Cineworld shares have been trading below this level since late June and have not broken above for the past six months, can they break out now?

Well, the pattern forming on the chart now points towards a breakout given that the stock has formed what is known as a pre-breakout structure that mimics an ascending triangle, hence, the odds are slightly in favour of a break above the resistance level.

However, the fundamental picture tells a different story given that the UK just entered another lockdown earlier today amid rising coronavirus cases as the government expects the next weeks to be the hardest for the country.

Therefore, there is little chance that cinemas will resume business until some of the lockdown measures are reversed and according to government estimates this could take a few weeks painting a pretty bleak picture for Cineworld.

In most cases, I would trust the charts since I’m a technical trader, and in this case, it is very unlikely that Cineworld shares will get the necessary momentum to break above the resistance level and launch a new rally.

Cineworld shares are more likely to trade below the resistance level until we get a positive fundamental trigger that can push the shares higher. However, nothing is guaranteed in the markets and I will be looking for confirmation of a move in either direction before establishing a new position.*

*This is not investment advice.

Cineworld share price

Cineworld shares today surged 5.59% to trade at 64.96p having risen from Monday’s closing price of 61.52p.