Market News & Analysis
Precarious situation now for Starbucks bulls in the medium-term
Kelvin Wong November 22, 2019 7:09 PM
Medium-term technical outlook on Starbucks Corp (SBUX)
click to enlarge charts
Key Levels (1 to 3 weeks)
Pivot (key resistance): 84.94
Supports: 81.03 (trigger) & 74.80/73.70
Next resistance: 92.16
Directional Bias (1 to 3 weeks)
Bearish bias below 84.94 key medium-term pivotal resistance and a break below 81.03 reinforces the start of a multi-week corrective down move sequence to target the 74.80/73.70 support zone in the first step.
On the flipside, a clearance with a daily close above 84.94 negates the bearish tone for a rebound towards the next resistance at 92.16 (12 Sep 2019 swing high & 61.8% Fibonacci retracement of the on-going decline from 26 Jul high to 05 Nov 2019 low).
- Since its all-time of 99.73 printed on 26 Jul 2019, the share price of SBUX has declined by 18% so far and it is now testing a major ascending trendline support in place since 28 Jun 2018 low.
- Also, it has traced out a series of “lower highs and lower lows” since 26 Jul 2019 that indicates the major uptrend phase from 28 Jun 2018 is at risk of transiting to a corrective down move phase.
- The daily RSI oscillator has already staged a bearish breakdown from a significant support (in parallel with the price action support from 28 Jun 2018 low) and retreated from it on 18 Nov 2019. These observations suggest that medium-term downside momentum remains intact and the major uptrend phase of SBUX since 28 Jun 2018 is at risk of being damaged.
- The 74.80/73.70 support zone is defined by a confluence of elements; the swing low areas of 17 Apr/29 May 2019, the lower boundary of a medium-term descending channel from 30 Aug 2019 high & a Fibonacci retracement/expansion cluster).
- Relative strength analysis from its ratio charts against the market (S&P 500) and its sector (Consumer Discretionary) suggest underperformance of Starbucks (SBUX).
Charts are from eSignal
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.