Starbucks Upside Looming?

Published on Monday, 27 August 2012 05:00 Written by TradersHuddle Wire

New York, August 27th (TradersHuddle.com) - Shares of Starbucks Corporation (NASDAQ:SBUX) ended the trading session higher by $0.8 or 1.67% from its previous close. Starbucks' price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the ongoing weakness.

Starbucks Corporation (NASDAQ:SBUX) retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through several distribution channels. Starbucks also produces and sells bottled coffee drinks.

Starbucks' recent stock range was formed by a trough where calculated support was defined at $43.04 and by a peak that established the resistance level at $48.62. This range could be used by traders managing their positions.

Traders wanting to establish a position in Starbucks or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk, as it shows where the bears were able to push the stock down, before the bulls step in with a bid.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short-term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: