Starbucks Could Grind Up To All-Time Highs If The Stock Can Regain This Key Level

Starbucks Corporation SBUX was trading over 1% higher at one point on Wednesday despite the general markets continuing to consolidate sideways, with the SPDR S&P 500 SPY trading mostly flat.

On Tuesday, Tigris Financial maintained its Buy rating on Starbucks and raised its 12-month price target to $136, which is about 16% above the current share price.

On Jan. 25, Starbucks will report its first-quarter 2022 earnings results, and traders and investors will be watching to see how the multinational coffee chain did over the holidays. On Dec. 21, Starbucks announced that it expected Dec. 23 to be its busiest day for gift card purchases. Starbucks also projected nearly $3 billion would be loaded onto Starbucks cards over the holidays.

Starbucks’ stock has been volatile, whipping up and down within the $104 and $117 range since suffering a bearish reaction to its fourth-quarter and full-year earnings report on Oct. 29. If Starbucks can break up through a key area of resistance, however, it could be headed back toward its July 23 all-time high of $126.32.

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The Starbucks Chart: On Dec. 20, Starbucks reversed course at the $104.02 mark and has since shot almost 10% higher. On Dec. 23 and Dec. 27, Starbucks climbed up to fill a gap left behind on Dec. 17 and on Wednesday the stock was looking to fill a higher gap between $117.47 and $118.36.

In order to fill that gap, Starbucks will need to bust through a key resistance level at $117.57, which has been holding the stock down since Sept. 15. If the stock is able to break above the area and fill the gap, it could run up toward the $120 level, which would put Starbucks within reach of filling an even higher gap that falls between the $123.37 and $124.25 range.

Gaps on charts fill about 90% of the time, so it’s likely Starbucks will rise up to fill both of its upper gaps in the future. If the stock is able to do so, it has room to trade back up toward its all-time high.

To break up through the key resistance level, Starbucks will need to see higher volume levels. On Wednesday, Starbucks was moving higher on lower-than-average volume, which indicates there is not a high level of interest in the stock. By the afternoon, only about 1 million shares had exchanged hands, compared to the 10-day average of 6.13 million.

Starbucks is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.

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• Bulls want to see big bullish volume come in and push Starbucks up toward the $118 area and into the upper gap. Above those levels there is resistance at $120.83 and near $123.33.
• Bears want to see Starbucks continue to reject the key resistance level and for big bearish volume to come in and drop the stock back under the $115.57 mark. Below the level, there is further support at $113.86 and $111.05.
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