The Coca-Cola stock (NYSE: KO) opened with a positive gap yesterday after the beverage giant reported earnings and revenue for Q3 that beat market expectations. Although the share continues to trade above the tentative upside support line drawn from the low of June 26th, it remained below the downside line taken from the high of September 3rd. Thus, as long as the stock is trading between those two lines, we would consider short-term outlook to be flat.
In order to start examining the bullish case, we would like to see the stock rising above 51.50, a resistance defined by the peak of October 12th. That way, it would also overcome the aforementioned downside line, something that may allow investors to initially test the peak of September 3rd, at 52.10. If that barrier is not able to halt the advance, a break higher may see scope for larger extensions, perhaps towards the 53.80 zone, marked by the high of March 10th.
Looking at our short-term oscillators, we see that the RSI runs above 50, but has recently turned down, while the MACD lies above both its zero and trigger lines. Both indicators detect upside speed, corroborating the case for another round of buying, but the fact that the RSI turned down suggests that a small retreat maybe in the works first, perhaps for the stock to challenge the 49.45 zone, or the upside support line drawn from the low of June 26th.
The move that could shift the outlook to a negative one may be a break below 48.60. The stock will already be below the pre-mentioned upside line and may initially slide to the low of September 24th, at 47.55. If that level is broken as well, then we could see extensions towards the 46.95 hurdle, marked by the low of August 21st, or towards the 46.20 obstacle, defined as a support by the low of August 4th.
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