Chart Wars: Coca-Cola Or PepsiCo — Which Stock Could Retrace Further?

Coca-Cola Co KO and PepsiCo, Inc. PEP destroyed their solid uptrends on Monday by falling almost 3% each intraday. Coca-Cola fell below its Jan. 11 higher low printed at the $59.84 level while Pepsico retraced below its most recent higher low of $173.15 created on Jan. 18.

When the SPDR S&P 500 ETF Trust SPY bounced up from its low-of-day on Monday afternoon the two multi-national beverage corporations didn’t bounce in unison, which indicates fear has entered into these two individual stocks despite bulls buying the dip in other stocks included in the SPY portfolio.

While the daily candle being printed on Coca-Cola's and PepsiCo.’s charts indicates the stocks may see more downside on Tuesday, Coca-Cola's chart has two remaining gaps below, which if filled could knock a substantial percentage of the share price.

It should be noted that events affecting the general markets, negative or positive reactions to earnings prints and news headlines about a stock can quickly invalidate patterns and breakouts. As the saying goes, "The trend is your friend until it isn’t," and any trader in a position should have a clear stop set in place and manage their risk versus reward.

In The News: Both Cola-Cola and PepsiCo are set to print their fourth-quarter and full-year 2021 results before the market opens on Feb. 10. For the third quarter, Coca-Cola reported earnings per share of 57 cents on $10 billion worth of revenue. PepsiCo reported net revenue of $20 billion and earnings per share of $1.60.

See Also: Stock Wars: Coca-Cola Vs. PepsiCo

The Coca-Cola Chart: Coca-Cola filled its closest lower gap on Monday, which was between the $59.30 and $59.59 range.

There are two lower gaps that remain empty and because gaps fill 90% of the time it is likely Cola-Cola will drop down into both ranges. The closest gap is between $56.32 and $56.96 and the lowest gap falls within the $53.61 to $54.14 range. If Coca-Cola fills the lowest gap, it will retrace an additional 9% from Monday’s share price.

  • If Coca-Cola closes Monday’s trading session near its low-of-day price, it will print a bearish Marubozu candlestick on the daily chart, which indicates lower prices are likely to come on Tuesday.
  • There is also a chance Coca-Cola prints an inside bar pattern to consolidate the move lower and the break of that pattern on Wednesday could be used by traders to gauge the future direction, which leans bearish.
  • Coca-Cola has resistance above at $60.13 and $61.44 and support below at $58.75 and $57.56.

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The PepsiCo Chart: On Monday, PepsiCo. almost printed a bearish engulfing candlestick on the daily chart, which indicates lower prices may come on Tuesday although, like Coca-Cola, an inside bar pattern may print to indicate consolidation is needed.

  • Unlike Coca-Cola, PepsiCo. doesn’t have any nearby lower gaps, which makes a large retracement less likely.
  • Toward the end of the trading day on Monday, Pepsico was printing a lower wick, which indicates there are bulls buying the dip below the $171.50 level.
  • PepsiCo has resistance above at $173.71 and $177.24 and support below at $169.97 and $166.75.
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