The Coca-Cola Co. stock (NYSE: KO) has been trading in a consolidative manner since Friday, when it broke above the downside resistance line drawn from the high of September 2nd. Despite the latest consolidative action, as long as the stock remains above that downside line, we will consider the short-term outlook to have turned cautiously positive.
That said, in order to get confident on larger advances, we would like to see a clear break above 54.60, a resistance marked by the high of September 23rd. Such a break may set the stage for advances towards the 55.45 barrier, which acted as a decent support between August 27th and September 15th. If market participants are not willing to stop there, then we may see them aiming for the high of September 16th, at 56.00, the break of which could see scope for extensions towards the 56.45 zone, near the high of September 8th.
Shifting attention to our short-term oscillators, we see that the RSI stands slightly below 70, and has recently turned down, while the MACD lies above both its zero and trigger lines. Both indicators detect upside momentum, which supports the case for further advances, but the fact that the RSI has turned down makes us careful over a small setback before the next leg north.
We will abandon the bullish case only if we see a retreat back below 53.30, a barrier that provided resistance between September 28th and October 5th. This could confirm the stock’s return back below the downside line drawn from the high of September 2nd, and may initially target the 52.55 zone, marked by the low of October 6th, which acted as a floor from September 28th until that day. If, this time, investors allow the share price to drift below that hurdle, we could experience declines towards the 51.65 level, defined as a support by the inside swing high of March 17th.
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