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Here’s Why Marston’s Share Price Is Stuck in a Range

Simon Mugo trader
Updated 29 Oct 2020

Practice Stock Trading
Martson's

Shares of Marston's PLC (LON: MARS) have been stuck trading in a range since early August as the UK entertainment sector continues to suffer from the impact of the coronavirus pandemic lockdowns.

Marston’s share price surged after its £780 million joint venture with Carlsberg’s UK brewing arm got regulatory approval on October 9th, but the rally was followed by a slow descent to the lows of its 3-month price range.

Such movements have characterised Marston’s share price for the past three months where a rally to the top of its trading range is followed by a steady descent to the bottom of the range.

The million-dollar question is, should you buy Marston’s shares? Well, there’s a simple formula for trading a stock that is moving sideways and that is to sell at the top and buy at the bottom.

In Marston’s case, I have a bullish bias given that the bullish moves happen over short periods, while the bearish moves take more time to play out indicating that the buying momentum is stronger than the selling pressure.

Marstons share price

Tradingview chart of Marstons share price 29102020

Therefore, I would be looking to establish bullish positions near the bottom and selling near the top.*

Having a fundamental driver behind the move would be great given that positive news could fuel a rally, while negative news could fuel a bear trend. However, this is not a requirement in order to make trades based on the technical criteria for trading when a stock is moving sideways.

You can see that the October 9 rally started on the 8th near the bottom before news of the regulatory approval hit, and savvy technical traders were already in the trade since the price had fallen to the bottom of the range at the time.

*This is not investment advice.

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading