Chipotle Mexican Grill, Inc. (CMG) shares have fallen more than 7% since Wednesday after another report of foodborne illness in Los Angeles. Business Insider broke the story of an investigation by the Los Angeles Department of Health following several reports of vomiting, diarrhea and nausea at the Pico Boulevard location. The reports were initially filed by consumers on IWasPoisoned.com, which tracks food illness outbreaks.

Chipotle responded by saying that it was aware of the reports on a user-generated reporting site, but the company pointed out that there was no clinical validation associated with the reports and that it has not been contacted directly by the consumers to substantiate the claims. The food company's stock has been extremely volatile surrounding food illness reports following a prolonged food safety crisis in 2015 and follow-on outbreaks over the years. (See also: Chipotle: Rise and Fall of a Wall Street Darling.)

Technical chart showing the performance of Chipotle Mexican Grill, Inc. (CMG) stock

From a technical standpoint, the stock fell from R1 resistance levels at $320.71, broke below its 50-day moving average at $296.78 and reached the pivot point at $291.86. The relative strength index (RSI) remains only slightly oversold at 40.41, but the moving average convergence divergence (MACD) experienced a bearish crossover that could foreshadow a further move lower over the medium term.

Trader should watch for a rebound from the pivot point at $291.86 or a breakdown to test lower trendline and S1 support at around $275.54. A further breakdown from these levels could lead to a move to S2 support at $246.68, which would mark a new 52-week low. Given the food scare and bearish overall picture this year, traders should maintain a bearish bias on the stock over the short and medium term. (For more, see: Short Sellers Win on Chipotle Outbreak.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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