Buying the Dip on Starbucks?

Published on Tuesday, 07 September 2010 05:28 Written by TradersHuddle Staff

New York, September 7th (TradersHuddle.com) - Shares of Starbucks Corporation (NASDAQ:SBUX) closed the trading session at $25.07 near its 50 day and 200 day moving averages currently set at $24.74 and $24.38 respectively. Starbucks' price action is 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 action is above important moving averages, it's important to highlight that the 50 day moving average is currently above the 200 day moving average, signaling that the stock is not technically broken from the long side and buying the dip strategy might be the best setup out there.

Looking at peaks and troughs horizontal support and resistance levels, we can see current calculated support at $22.50 and calculated resistance at $23.64. These levels should also be evaluated by traders when planning their trades, as they provide an insight into the latest price action.

If traders want to establish a position on Starbucks need to place special attention to the stock price action and establish a position as close to the moving averages as possible. Also traders need to consider the latest price action, via the stocks current range defined by the peaks and troughs algorithm, not forgetting that if the stock had a wild move outside its range, it would certianly take a few days to establish support and resistance.