SBUX closes lower for the 2nd day in a row
Starbucks Corporation (SBUX) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, SBUX ended the month 4.0% higher at 76.53 after edging lower $0.11 (-0.14%) today, significantly underperforming the Nasdaq 100 (1.78%). Trading up to $0.75 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (SBUX as at Jul 31, 2020):
Friday's trading range has been $1.05 (1.38%), that's far below the last trading month's daily average range of $1.58. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SBUX.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 75.40 (S1). Prices are trading close to the key technical resistance level at 77.50 (R1). After having been unable to move lower than 75.40 in the previous session, the share found buyers again around the same price level today at 75.49. The last time this happened on July 24th, SBUX gained 0.90% on the following trading day.
Starbucks shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Buying could accelerate should prices move above the nearby swing high at 78.49 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 75.40 where further sell stops might get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Starbucks. Out of 303 times, SBUX closed higher 57.43% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 62.38% with an average market move of 1.08%.