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Starbucks shares have experienced a decline in premarket trading on Wednesday following the suspension of its 2025 outlook and the release of disappointing preliminary quarterly results. This occurrence comes as new CEO Brian Niccol begins to implement a turnaround strategy for the global coffee chain. The stock is currently at a critical juncture, with key support and resistance levels to monitor in the upcoming days.
Niccol, who previously served as CEO of Chipotle Mexican Grill, took on the leadership role at Starbucks in August with the goal of revitalizing sales growth. The company has been facing increased competition and sluggish demand in its primary markets of the United States and China, leading to a decline in sales that has impacted the stock price. Since Niccol’s appointment, Starbucks shares have increased by approximately 28%, but have remained flat since the beginning of the year.
The technical indicators on Starbucks’ chart are signaling potential movements in the stock price. The shares have been consolidating within a symmetrical triangle pattern since mid-August, with the stock currently teetering on the brink of a breakdown below the pattern. Investors should pay close attention to the critical support and resistance levels on the chart to gauge potential moves in the stock.
In terms of support areas, investors should monitor the price’s reaction to the $90 level in the event of a breach from the symmetrical triangle. This level is near a trendline that connects previous lows on the chart, and could potentially act as a buying opportunity if the stock reaches this area. A further decline could see the stock dropping to around $83, where buying interest may be sparked near the neckline of a double bottom pattern that formed earlier in the year.
On the flip side, if the stock manages to recover from the current decline and breaks above the symmetrical triangle, investors should monitor overhead resistance levels. The shares may face resistance near a multi-month trendline that spans from March 2023 to September this year, potentially leading to a move up to the $99 level if the top trendline of the pattern is breached. A close above this level could signal a rally towards $107.50, a significant price point on the chart that investors may consider as an exit point near the November 2023 swing high.
In conclusion, Starbucks shares are facing a critical period as the company looks to implement a turnaround strategy under new CEO Brian Niccol. The stock’s technical indicators point to potential movements in the near term, with key support and resistance levels to monitor. The $90 and $83 levels are important areas for potential buying opportunities, while the $99 and $107.50 levels signify critical overhead resistance. Investors should stay vigilant in monitoring these levels to gauge potential movements in Starbucks shares in the coming days.
