Starbucks Corp. (SBUX) is rallying before Friday's opening bell after receiving an extra bullish shot from its latest earnings report. Let's check out the charts and indicators to see if this current strength can carry the coffee giant to new highs.
In this daily bar chart of SBUX, below, we can see a mixed picture of price action and indicators. Prices closed below the cresting 50-day moving average line on Thursday but are indicated to start trading here on Friday back above it. The rising 200-day moving average line intersects below the price action around $58. A bullish golden cross of the 50- and 200-day averages can be seen at the beginning of November.
The daily On-Balance-Volume (OBV) line shows a rise from early July to early November, signaling more aggressive buying. However, the OBV line has been neutral the past three months. A new high for the OBV line is not far away, but we need to see volume increase on days when SBUX closes higher. The Moving Average Convergence Divergence (MACD) oscillator is right on the zero line, and continued price strength should move this indicator to a buy again.
In this weekly bar chart of SBUX, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line looks much stronger than the daily line. Here the line is poised to break out of a two-year sideways pattern. A new high for the weekly OBV line (possible here on Friday) would be a strong signal that the bulls are in control now. The weekly MACD oscillator has narrowed from above the zero line and is likely to turn up again with the price action.
In this Point and Figure chart of SBUX, below, we can see that a trade at $68.77 will be a triple-top breakout. A price target of $75.35 is projected.
Bottom line strategy: SBUX needs to open higher and close higher here on Friday. A trade at $68.77 will be a signal that prices should move to new high ground. The upside price target is $75.35. Longs and new buyers should risk below $62.