From the beginning of March, the Coca-Cola stock (NYSE: KO) was drifting higher, while trading above a medium-term upside support line taken from the low of March 8th. But after reaching its all-time high, at 55.92, the stock started sliding and yesterday the upside line got broken, after the price moved sharply to the downside. In addition to that, KO dropped below its key 53.62 support area and tested the 52.92 level, marked by the lows of August 12th, 13th and 14th. So, the technical picture is now leaning more to the downside, as the price is forming lower highs and it is trading below a short-term tentative downside resistance line taken from the high of September 4th. But in order to get comfortable with further declines, we will wait for a clear drop below the 52.92 support zone, hence why we will stay cautiously-bearish, at least in the short run.
As mentioned above, a drop below the 52.92 area could open the door for a further move down towards lower support levels. This is when we will examine a possible test of the 51.39 hurdle, marked by the lowest point of August. Initially, that hurdle may provide some additional support and the stock could rebound back up a bit. That said, if KO struggles to move back above the 54.76 barrier, this could result in another round of selling, possibly bringing the price back to the 51.39 zone again. If this time, that zone surrenders and breaks, this could clear the path to the 50.46 level, marked near the lows of June 19th and 28th.
Looking at our short-term momentum studies, we can see that both are showing increasing downside speed. The RSI is below 50 and points lower. The MACD had dropped below zero, it points to the downside and is sitting below the trigger line. Both indicators seem to be in support of the above-discussed scenario.
Alternatively, if the price reverses and climbs back above both of the aforementioned lines, the upside and the downside, this could interest new buyers to join in. But in order to get comfortable with higher areas, a break above the 54.76 barrier is required. That barrier is the high of this week. The next potential resistance area to consider could be the 55.31 obstacle, a break of which could send the stock to the all-time level, at 55.92. If that level is not able to withhold the price down, its break could send the stock into the uncharted territory, forming a new all-time high.
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