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Starbucks shares experienced a decline in premarket trading on Wednesday following the suspension of its 2025 outlook and the release of disappointing preliminary quarterly results. This occurred as new CEO Brian Niccol began to implement a turnaround strategy.
The 50-day moving average and the lower trendline of a symmetrical triangle have been defended by buyers, despite the fact that the stock is on the brink of a decline below the pattern.
During a recovery, investors should observe overhead levels near $99 and $107.50, while also monitoring key support areas on Starbucks’ chart at $90 and $83.
In premarket trading on Wednesday, Starbucks (SBUX) shares declined after the global coffee chain suspended its 2025 outlook and reported preliminary fiscal fourth-quarter results that fell short of Wall Street expectations. This came as new CEO Brian Niccol began to implement a turnaround strategy.
In order to stimulate sales growth, Niccol, who assumed the role of CEO at Chipotle Mexican Grill (CMG) prior to joining Starbucks in August, expressed his intention to streamline the organization’s menu and reconsider its pricing strategy. Nevertheless, the coffeehouse chain stated that the modifications will require time, and that it was unable to halt a decrease in traffic during the most recent quarter.
Starbucks shares have increased by approximately 28% since Niccol’s appointment; however, the stock has remained unchanged since the beginning of the year due to a decline in sales that has resulted from increased competition and sluggish demand in its primary markets of the United States and China.
Technical Analysis of Starbucks Stock
Starbucks shares have been consolidating within a symmetrical triangle since mid-August, when they breached the 200-day moving average (MA) that is closely monitored.
The stock is on the brink of a breakdown below the triangle on Wednesday, despite the fact that purchasers have recently defended the pattern’s lower trendline and upward-sloping 50-day MA. About an hour prior to Wednesday’s opening bell, Starbucks shares were trading at approximately $93, a decline of nearly 4%.
Critical Support and Resistance Levels to Monitor
Investors should pay attention to the $90 level as a critical support area in case of a breach from the symmetrical triangle. Buying opportunities may arise around this level, which is near a trendline connecting the October 2023 trough and the April 2024 countertrend apex.
A drop below this level could lead to a decline to around $83, where buying interest may be seen near the June swing high. This area also serves as the neckline of a double bottom pattern that formed on the chart between May and July.
On the upside, Starbucks shares may encounter resistance near a multi-month trendline that connects comparable trading levels from March 2023 to September this year. A move above the symmetrical triangle’s top trendline could see the stock reach the $99 level.
A decisive break above $99 could potentially lead to a rally towards $107.50, a level of interest to investors near the significant November 2023 swing high. This region is also just above a measured move price target that projects a target of $107 by adding the distance of the symmetrical triangle to the upper trendline of the pattern.
Conclusion
Investors in Starbucks shares should closely monitor the critical support and resistance levels mentioned above to gauge the stock’s future direction. The suspension of the company’s 2025 outlook and disappointing quarterly results have put pressure on the stock, but with new CEO Brian Niccol implementing a turnaround strategy, the future outlook remains uncertain. By keeping an eye on key technical levels, investors can make informed decisions about their Starbucks holdings and potential trading opportunities.
