Key Takeaways
- Starbucks shares fell sharply Wednesday after the coffee chain posted fiscal second-quarter results that came in below Wall Street's expectations.
- The stock dropped below a triangle symmetrical early Wednesday morning, indicating a possible further decline.
- Investors should watch major support levels on Starbucks' chart around $77 and $72, while also monitoring important overhead areas near $91 and $99.
Starbucks (SBUX), the coffee chain, reported fiscal second-quarter results on Wednesday that fell short analysts’ expectations.
The company reported that same-store sales globally fell by 1% during the third quarter, a larger drop than Wall Street expected. CEO Brian Niccol, who assumed the role last September and has launched a major turnaround effort, characterized the results as "disappointing" in a conference call late Tuesday.
The coffee giant is also facing external challenges, such as a possible rise in coffee bean prices amid uncertainty over the tariffs imposed by Trump’s administration.
Starbucks shares fell nearly 7% in afternoon trading to around $79, after falling as low as $75.50 in the morning session. The stock is down 13% since the beginning of this year, and it has lost about a third since its 52-week high reached in early march.
Below, we analyze the technicals of Starbucks’ chart to identify major price levels that may be watched by investors.
Breakdown of the Symmetrical Triangle
Starbucks shares have consolidated in a triangle symmetrical pattern after falling below the 200 day moving average (MA). This indicates that market participants are unsure of their next move ahead of Starbucks’ quarterly earnings. However, the stock fell below the bottom trendline of the pattern early Wednesday, setting up for a potential further move lower.
It’s also worth noting that the 50-day MA has converged toward the 200-day MA throughout April to signal a looming death cross—a bearish chart pattern that indicates lower prices ahead.
Let’s identify and monitor two important overhead areas that are worth monitoring in the event of a recovery.
Major Support Levels to Keep an Eye
The first level that investors should be watching is around $77. Investors can look for entry points near the low of April, which is also close to a short consolidation period that preceded an important breakaway gap in the chart last August.
Starbucks shares could return to support at $72 if they are sold below this level. This area of the chart could attract interest from buyers near last year’s notable swing lows in May and July. The location is also in the vicinity of the measured move price target which calculates the size of the symmetrical triangular pattern and subtracts that amount from its lower trendline.
Important Overhead Areas That Are Worth Monitoring
Investors should pay close attention to the $91 region during potential recovery efforts. Tactical traders may place sell orders around the opening price of the August breakaway gap, which corresponds to the low for a retracement in the following months.
Starbucks shares could test resistance at $99 if a bullish reversal is more significant. This area could provide overhead pressure near a line that connects a series peaks on the chart from last August to early April.
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