Is Starbucks Close to Probable Support

Published on Friday, 07 September 2012 09:20 Written by TradersHuddle Wire

New York, September 7th (TradersHuddle.com) - Starbucks Corporation (NASDAQ:SBUX) closed the trading day at $50.84, near its 50 day and 200 day moving averages currently set at $49.42 and $50.56 respectively. Starbucks' price action placed the stock above these important levels, which could translate into a trading opportunity.

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.

Although, the price is above important moving averages, it's important to highlight that this is not a prime setup for buying the dip strategy, as the 50 day moving average is currently below the 200 day moving average.

The peaks and troughs algorithm shows calculated support at $43.04 and resistance at $50.06. These levels should also be evaluated by traders when planning their next move, as they provide an insight into the latest price action.

If traders want to establish a long position in Starbucks, it will certainly be better to wait, given that the stock is technically broken with the 50 day moving average trading below the 200 day moving average. Traders can also look at the current range defined by the peaks and troughs to establish a short trade versus those levels.