Current trend

Shares of Caterpillar Inc., a global manufacturer of construction and mining equipment, have been actively declining since September: during this time, the price has changed direction at the reversal level of 281.25 (Murrey level [2/8]), left the borders of the main Murrey trading range and is currently trying to resume growth in the lower reversal zone.

The instrument is in the area of 234.38 (Murrey level [-1/8]), but in order to change the current trend and noticeably restore positions, it will need to consolidate above the central line of Bollinger Bands and the 250.00 mark (Murrey level [0/8]). In this case, the quotes will again be within the main trading range and will be able to rise to the levels of 281.25 (Murrey level [2/8]) and 296.88 (Murrey level [3/8]). Re-consolidating the price below the 234.38 mark will lead to a decrease to 218.75 (Murrey level [-2/8]) and 203.12 (Murrey level [-2/8], H4).

Technical indicators confirm the continuation of the downtrend: Bollinger Bands and Stochastic are reversing down, and MACD decreasing in the negative zone does not exclude growth, but its potential is limited.

Support and resistance

Resistance levels: 250.00, 281.25, 296.88.

Support levels: 234.38, 218.75, 203.12.

Trading tips

Short positions can be opened below the level of 234.38 or after a price reversal near 250.00 with targets at 218.75, 203.12 and stop-losses at 244.50 and 260.50, respectively. Implementation period: 5–7 days.