McDonald’s Corporation (NYSE:MCD) shares dropped by more than 6% in just 3 days. The company laid out its future plans, and investors didn’t like what they heard.

The selloff may present a buying opportunity. The shares are both oversold and at support. These could be bullish dynamics and they may set the stage for a move higher.

Oversold conditions are created by emotional and aggressive sellers. They believe the shares will continue to fall so they sell regardless of the price. This pushes the stock below its normal or typical trading range.

The lower part of the chart is the Relative Strength Index. If the blue line is below the horizontal red line like it is now, it indicates oversold conditions.

This can be important.

Many trading strategies are based on mean reversion. Oversold conditions will draw buyers into the market. They will be anticipating a reversion or move higher.

Their buying could put upward pressure on the shares.

As you can see on the chart, McDonald’s is at a support level. This level has been support before, and levels that have previously been support can become so again.

This is due to remorseful or regretful sellers.

Back in October 2023, the shares found support around $235. When they rallied afterward, many of the people who sold decided that doing so was a mistake. They also decided that, if they could eventually, they would repurchase their shares at their selling price.

When the shares dropped back to $235 in June 2024, they placed buy orders, which created support.

Now a similar dynamic is occurring. Remorseful sellers are entering the market as buyers. Their buying has created support at the level once again.

Oversold conditions are also drawing buyers into the market. There is a chance McDonald’s reverses and moves higher from here.

Photo: Shutterstock