(SBUX) Starbucks shares will possibly remain on the observation list after climbing 25% on Tuesday on news the company has selected Chipotle Mexican Grill (CMG) CEO Brian Niccol as its new CEO, replacing Laxman Narasimhan, who had worked in the role for just 1 year 5 months.
During Narasimhan’s period, the coffeehouse group experienced so many hurdles involving contracting sales, rising competition in China, and selective spending from price-conscious customers. That encouraged activist investors to lead to modification in a bid to elevate the share price.
Let’s take a complete look at Starbucks’ chart and turn to technical evaluation to find out significant price levels possibly to drive investors’ attention.
Key Takeaways:
- Starbucks shares jumped 25% on Tuesday after announcing that Brian Niccol from Chipotle will be the new CEO, replacing Laxman Narasimhan, who was in the role for 17 months.
- The stock has shown a double bottom pattern, which suggests it might start going up after a previous decline.
- The price might get support around $90 and $83, but could face resistance near $98 and $107.50.
Double Bottom Confirmation
Starbucks shares progressed double bottom between May and July, a classic chart order that indicates a reversal from a prior down move to a new uplift.
- News Impact: On Tuesday, the coffee chain’s stock jumped because of news, breaking through key technical levels like the double bottom’s neckline and the 200-day moving average.
- Volume: The trading volume was very high, over 150 million shares, which is the highest since June 7, 2000, showing strong interest from big investors like institutions and hedge funds.
- RSI Warning: The Relative Strength Index (RSI) is above 70, which suggests the stock might be overbought and could see some short-term profit-taking.
- Future Monitoring: Investors should watch important support and resistance levels in the upcoming trading sessions due to the recent price surge.
Key Support Levels:
- Initial Drop: If the price falls, it might reach $90. This level could attract buyers because it matches a significant previous low from October and similar levels from March and April. It also aligns with the 50% Fibonacci retracement from the November high to the May low.
- Deeper Drop: If the price falls further, it could drop to around $83, where there’s expected support. This level is where the stock’s price gap between April and June might get filled.
Important Resistance Levels:
- First Resistance: The stock could face selling pressure around $98. This is where a trendline connecting peaks and troughs from March 2023 to February 2024 might act as resistance.
- Higher Resistance: If the stock moves up further, it might test $107.50. This level is near a November high and could be a strong resistance point after a 15-month downtrend.
Current Price: Starbucks shares were down 0.3% at $95.60* in recent premarket trading. (For current stock prices: MarketWatch)
Conclusion: Starbucks Shares
Starbucks shares saw a big jump of 25% on Tuesday after the company announced Brian Niccol from Chipotle as the new CEO, replacing Laxman Narasimhan. This change came after a tough period for Starbucks, with declining sales and increasing competition.
The stock broke through important technical levels, including the double bottom and 200-day moving average, with high trading volume showing strong interest from big investors. However, the Relative Strength Index (RSI) is over 70, which means the stock might be overbought and could experience short-term profit-taking.
Looking ahead, investors should watch key support levels at $90 and $83 for potential buying opportunities, and key resistance levels at $98 and $107.50 for possible selling pressure. As of the latest premarket trading, Starbucks shares are down slightly by 0.3% to $95.60.
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