Shares of Coca-Cola just busted through a major channel and seem to be gaining traction on the reversal.
If you’re waiting for an opportunity to catch this new trend, better keep close tabs on this ongoing retest.
The Coca-Cola Company (KO): 4-hour
This stock had been trending higher inside an ascending channel since December last year, before bears took the upper hand last month.
A retest of the former channel support is currently happening, and this might be a test of whether or not sellers can keep dominating the game.
This area of interest happens to be right smack in line with the top of a newly-forming descending channel, adding to its strength as a ceiling.
Oh, and did I mention that it coincides with the 100 SMA dynamic inflection point, too?
Even though the 100 SMA is still above the 200 SMA to reflect bullish pressure, the gap between the moving averages is narrowing to hint at a possible bearish crossover.
At the same time, Stochastic is reflecting exhaustion among buyers, so turning south would confirm that bearish momentum is building up. In that case, share prices could slump to the channel bottom around $57 next.
So far, this stock has been outperforming the market in the past few days, as the consumer discretionary sector is showing signs of resilience. A break above the $64 level might be enough to signal that bulls are charging again.
Still, a return in risk-off flows stemming from higher borrowing costs and global recession fears might spur another leg lower for KO shares.
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