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Fan Yang

Starbucks (SBUX) About to Test Key Resistance Around $58

Starbucks (SBUX) has been in consolidation mode since 2015 when price retreated from $64 a share. Price did break higher to $65 a share in 2017, but price action was essentially sideways as we can see on the weekly chart.

SBUX Weekly Chart

(click to enlarge)

Long-term Trend Remains Intact:
- In 2018, price fell below the consolidation range support, which was around $52.70. Subsequently, SBUX fell to $48 before finding support.
- This $48 was key support, a projected trendline support coming up from the lows in 2019 around $4.00.
- The respect of this trendline suggests long-term bulls are still in charge.
Key Resistance:
- Price has rebounded nicely from $48 and is now approaching $58. Here price will be challenged by a falling trendline coming down from the $65 high in 2017. 
- Meanwhile, the RSI is right around 60. 
- Essentially, if price were to hold below $58, and the weekly RSI turns down from 60, the medium-term bearish momentum in 2018 would still be in play. 
- This would suggest further bearish correction, or at least further sideways action.
- On the other hand, a break above $58, with the weekly RSI pushing above 60 would suggest bullish continuation. 
Key Support:
- Whether price breaks above $58 or not, we still might see a pullback. Now, on the pullback, we should monitor the $52.70-$53 area as a critical support for the bullish outlook. In other words, if price retreats from instead of breaking above $58, see what happens around $53. If price holds above this critical support, I would anticipate an eventual break above $58.
- A slide below $53 on the other hand, even if price had broken above $58, would likely suggest further consolidation/bearish correction.
- Meanwhile, the daily RSI should hold above 40 in the bullish scenario. 

SBUX Daily Chart

(click to enlarge)