Coca-Cola (NYSE:KO) opened with a positive gap yesterday, after the company announced better than expected quarterly earnings results.
The gap took the stock above the peak of July 16, at 56.65, but participants abandoned the share after it hit 57.55, allowing it to retrace back below 56.65. However, bearing in mind that the stock continues to trade above the upside support line drawn from the low of Jan. 29, we will continue to consider the medium-term outlook to be positive.
The current retreat may continue for a while more, but we see decent chances for the buyers to take charge again from near the 55.20 area, or even slightly lower, near the aforementioned upside line. If so, we could see another test at around 57.55 soon, the break of which would confirm a forthcoming higher high and perhaps pave the way towards the high of Mar. 5, 2020, at 58.25. If they are not willing to stop there, then extensions towards the 59.00 zone could be possible. That area is defined as a resistance by the high of the day before.
Shifting attention to our short-term oscillators, we see that the RSI turned down after hitting its 70 line, while the MACD, although above both its zero and its trigger lines, shows signs that it could fall back below its trigger soon. Both indicators detect slowing upside speed and support the case for some further retreat before the next leg north.
In order to abandon the bullish case, we would like to see a dip below 54.55. This may take the stock below the pre-discussed upside line and may initially open the path towards the low of July 6, at 53.55. The next support to consider may be the 52.50 barrier, marked by the lows of Apr. 1 and 5, the break of which could allow the fall to run towards the low of Mar. 25, at around 51.20.