Stock of the day: PepsiCo

In the past few days, we have been watching the news about a possible invasion, and we have to continue looking at the headlines regarding the potential rate hike in the US. All this uncertainty creates choppy movements in both directions and significant mood swings, giving us a feeling that the market is bipolar.

The occasion I prepared today for you is PepsiCo because I guess that we are very close to a major sell signal here. The main reason for this is the giant head and shoulders pattern (yellow) that emerged on the chart this year. We are currently on its neckline (upper green), which at the same time is the 23,6% Fibonacci. For now, that will be the most important support, which the buyers are currently using.

In case of a breakout, we will receive a strong sell signal. Not great, but still pretty significant. Why not great? Because we are very close, we have other major supports like the long-term uptrend line (red) and the 38,2% Fibonacci.

Ok, how to deal with all this? In my opinion, a breakout of the 23,6% will bring us a sell signal, at least worth considering. The potential target for that drop would be the 38,2% Fibo. On the other hand, a proper bounce of the 23,6% Fibonacci would keep the buy signal alive, with the potential target on the highs from January.