Chipotle's Bounce Happened At A Bullish Technical Level

There’s no question that 2015 was a year to forget for Chipotle Mexican Grill, Inc CMG shareholders. An E. coli outbreak sent same-store sales and the stock's share price plummeting, but Chipotle bulls hoping that the worst is now behind the ailing stock may have new reason to be optimistic.

Despite being down another 2 percent so far in 2016, Chipotle may have found support at a very encouraging technical level for long-term investors. The stock's pullback from all-time highs near $760 to the $400 level represented a 47 percent pullback, almost identical to the 47 percent pullback that the stock endured in 2012.

Related Link: CDC Expected To Declare End To Chipotle's E. Coli Outbreak

Following that 2012 decline, Chipotle spent the majority of 2013 and 2014 ripping to new all-time highs, eventually reaching 41 percent higher than its 2012 highs by the end of 2015.

If Chipotle once again repeats this pattern, shareholders could see the stock testing the $1000 level by the end of 2017.

In the near-term, Chipotle has a lot of ground to make up to get back what it has lost and break out of its bearish trading pattern, but if the $400 level continues to hold as support, Chipotle bulls have reason to hope that history will repeat itself.

Disclosure: the author holds no position in the stocks mentioned.