Stock of the day: PepsiCo

On the last trading day of the week, we’re coming back to PepsiCo. This is a company we analysed back in February for the first and last time. Back then, we were bearish; the price had created a very handsome Head and Shoulders pattern on the chart. At the time, we concluded our analysis by saying:

“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 do we 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”

We did break the 23,6% and we did reach 38,2%! In fact, the price went even deeper, almost touching 50%. Since then, the price has been rising higher, bringing us to the current sentiment on the chart, which is… bearish.

On PepsiCo, I’m looking forward to the price testing the long-term up trendline (green). The reason for that is the false breakout from August (grey) and most recently, two hammer daily candles in a row (yellow). The sell signal will cancel should the price come back above the highs from Wednesday, but chances for that happening are now rather limited.