Starbucks (SBUX) Brewing a Breakout? Donโt Miss This $100 BattleStarbucks (SBUX) 2-Hour Chart Breakdown
Hey traders, letโs dive into Starbucks (SBUX) on the 2-hour chart and see whatโs cooking. The price is sitting at $99.65 right now, up a tiny 0.01%, but donโt let that small move fool youโthis chart has been a wild ride lately, and I think weโre at a really interesting spot for a potential trade.
Whatโs Been Happening with the Price?
If you look at the chart, youโll see Starbucks hit a high of $112.38 back on March 17th. That was the peak, and man, did it come crashing down after that! The price tanked all the way to $97.34 by early April, a pretty steep drop. Since then, though, things have calmed down a bit, and weโve been stuck in this tight range between $97.34 and $100.00. Lately, the price has been pushing toward the upper end of that range, and itโs got my attention.
Letโs Talk Trends
From mid-March to early April, we were in a clear downtrend. You can see it on the chartโlower highs, lower lows, and a descending trendline that kept the price in check as it slid down. It was a bearโs paradise, and thereโs even a sell signal marked on the chart from that $112.38 peak that caught a massive 27.96% profit on the way down. Not bad at all!
But now, things are starting to shift. After hitting that $97.34 low, the price has been consolidating, and just recently, it broke above that descending trendline. Thatโs a big deal because it tells me the bears might be losing their grip. Weโre not in a full-on uptrend yet, but the momentum feels like itโs tilting toward the bulls, especially with the price testing that $100.00 level.
Key Levels to Watch
Letโs zoom in on the levels that matter here. On the downside, $97.34 has been a rock-solid support. The price has bounced off that level a couple of times in early April, so itโs a spot Iโm keeping an eye on. If we drop back down, thatโs where Iโd expect buyers to step in again.
On the upside, $100.00 is the big resistance weโre testing right now. The price has struggled to break through here before, so itโs a critical level. If we can get a clean break above it, I think we could see a nice move higher. The next big resistance after that would be around $107.00, which was a swing high from late March, and then up toward $111.00 or even that $112.38 peak if things really get going.
What the Past Signals Tell Us
The chart has a couple of trade signals marked, which give us some context. That sell signal at $112.38 was a home run, as I mentionedโ27.96% profit as the price collapsed. Then thereโs a buy signal at the $97.34 low on April 5th, but that one only managed a peak profit of 0.27%. Not exactly a big win, and it makes sense because the price has been stuck in this range since then. Itโs like the marketโs been taking a breather, trying to figure out its next move.
Digging into the Technicals
Alright, letโs get into the nitty-gritty of whatโs happening on the chart. That break above the descending trendline is a bullish sign for me. Itโs like the price is saying, โIโm done with this downtrend, letโs try something new.โ Weโre also in this consolidation range between $97.34 and $100.00, and when I see a range like that, I know a breakout is usually coming. The question is, which way?
One thing thatโs catching my eye is the potential for a double bottom pattern. Weโve got two tests of that $97.34 support, and if we can break above $100.00, that would confirm the pattern. If that happens, Iโd measure the height of the pattern and project it upward, which could take us toward $107.00 as a first target. Thatโs something to watch for.
Iโd love to see volume on this chart to confirm the breakout, but from the price action alone, it feels like thereโs some buying interest building as we push toward $100.00. If we get a strong candle closing above that level, Iโll be a lot more confident in the bulls.
How Iโd Trade This Setup
So, whatโs the play here? I see a few ways to approach this, depending on what the price does next.
First, letโs talk about the bullish case. If we get a solid break above $100.00โideally with a strong 2-hour candle and some good volumeโIโd be looking to go long. My first target would be $107.00, and if we get some momentum, maybe even $111.00 or $112.38. Iโd set my stop loss just below the recent swing low around $98.00 to protect myself in case this breakout fails. That trendline break and the potential double bottom make me think the bulls have a shot here.
On the flip side, if the price gets rejected at $100.00โand Iโll be watching for something like a shooting star or a bearish engulfing candleโIโd consider a short. If we drop back down, $97.34 is the first target, and if that support breaks, we could even see $94.00, which is a psychological level and a spot where Iโd expect some buyers to show up. For a short, Iโd set my stop loss just above $100.65 to give it a little room.
If youโre more of a scalper, you could play the range while weโre stuck in it. Buy near $97.34, sell near $100.00, and use tight stops outside the rangeโsay, below $97.00 for longs and above $100.65 for shorts. Itโs a decent way to grab some quick profits while we wait for the bigger move.
A Word on Risk
One thing I always remind myself is to keep risk in check. Starbucks has been volatileโlook at that 27.96% drop from the peak! So, Iโd be careful with my position size and aim for at least a 1:2 risk-reward ratio on any breakout trade. Also, keep an eye out for any news that might shake things up, like earnings reports or big economic data releases. Starbucks is in the consumer discretionary sector, so things like consumer spending trends or even coffee prices could move the stock.
The Bigger Picture
Speaking of the broader market, Starbucks can be influenced by how the NASDAQ 100 is doing, since itโs listed there. If the overall market is feeling optimistic, that could help push SBUX higher. On the other hand, if thereโs a risk-off vibe, we might see that $100.00 resistance hold strong. Itโs always good to check the bigger picture before jumping into a trade.
Wrapping It Up
So, where does that leave us? Starbucks is at a really interesting spot right now, testing that $100.00 resistance after breaking above the descending trendline. Iโm leaning toward a bullish breakout, especially with that potential double bottom pattern, but Iโll be watching closely to see if we get confirmation above $100.00. If we do, I think $107.00 is a realistic target, with $111.00 or higher in play if the bulls really take control. But if we get rejected here, $97.34 is the level to watch on the downside.
For now, Iโd say be patient and wait for the price to show its hand. Whether youโre looking for a breakout or playing the range, thereโs definitely an opportunity here. Just make sure to manage your risk and stay on top of any news that might move the stock. Letโs see how this plays out Iโll be watching this one closely!