Stock of the day: PepsiCo
01 March 2023
Today, we will provide a small update on PepsiCo, which we previously analyzed on February 9th when the price was expecting the earnings report inside a rectangle pattern. This is what we concluded in the previous piece:
"The rectangle pattern and the long-term uptrend line provide a clear picture of the current situation, and a break to the upside would indicate a continuation of the positive trend for PepsiCo. However, investors should keep a close eye on the results, as a miss in earnings could potentially result in a sell-off and a change in the current trend. The bullish option seems slightly more probable at the moment."
Surprisingly (NOT), earnings came in better than expected, and PepsiCo climbed significantly higher, reaching the 178 USD mark. Then, the price created another rectangle formation (yellow), which locked PEP inside a sideways trend for two weeks. Most recently, the price broke to the downside, giving us a mid-term sell signal.
Recent price moves have allowed us to confirm the mid-term dynamic resistance (red). We also have the long-term dynamic support (blue), which effectively locks the price inside a big symmetric triangle pattern. This is great because price action traders will now wait for a breakout from this formation. If the price breaks the upper red line, it will give us a strong signal to buy, while if the price breaks the lower blue line, it will give us a proper signal to sell.