Based on the weekly chart analysis, Pepsico Inc. (
PEP
) has been on an overall uptrend, with rising prices supported by observations from the stochastic oscillator. The price has formed a rising wedge pattern. However, it is essential to note that the price has already breakout of the resistance area within the rising wedge pattern, but there is still a tolerance level until the price breaches the macro resistance marked by the dotted line.
Currently, the price is trending downwards, which is supported by the presence of an evening star candlestick pattern. An evening star pattern consists of three candles: a large bullish candle, followed by a smaller indecisive candle, and finally a large bearish candle (need confirmation on closing price this week). This pattern suggests a possible reversal in the ongoing uptrend.
The stochastic 5,3,3 oscillator has shown a crossing in the overbought area. Looking historically, a similar occurrence in the past has resulted in bearish price movements until the stochastic reaches the oversold area. This implies a potential bearish trend in the coming days or weeks.
The downside target is approximately 180.37. That the price is expected to decline towards this level before potentially finding support or stabilizing. Traders may use the oversold stochastic condition as a signal to take profits or consider buying opportunities, as historically, such conditions have led to an increase in price after the oversold level is reached.
Overall market conditions and any significant news related to the company could influence the price movement. After reaching the downside target, there is a possibility that the price may start increasing again, but further analysis will be required at that point to assess the potential direction.
PEP
) has been on an overall uptrend, with rising prices supported by observations from the stochastic oscillator. The price has formed a rising wedge pattern. However, it is essential to note that the price has already breakout of the resistance area within the rising wedge pattern, but there is still a tolerance level until the price breaches the macro resistance marked by the dotted line. Currently, the price is trending downwards, which is supported by the presence of an evening star candlestick pattern. An evening star pattern consists of three candles: a large bullish candle, followed by a smaller indecisive candle, and finally a large bearish candle (need confirmation on closing price this week). This pattern suggests a possible reversal in the ongoing uptrend.
The stochastic 5,3,3 oscillator has shown a crossing in the overbought area. Looking historically, a similar occurrence in the past has resulted in bearish price movements until the stochastic reaches the oversold area. This implies a potential bearish trend in the coming days or weeks.
The downside target is approximately 180.37. That the price is expected to decline towards this level before potentially finding support or stabilizing. Traders may use the oversold stochastic condition as a signal to take profits or consider buying opportunities, as historically, such conditions have led to an increase in price after the oversold level is reached.
Overall market conditions and any significant news related to the company could influence the price movement. After reaching the downside target, there is a possibility that the price may start increasing again, but further analysis will be required at that point to assess the potential direction.
Price Behavior and Trendlines: Monitoring price behavior around trendlines helps traders determine their significance. Multiple violations may weaken the relevance of a trendline.
*Some books also refer to price violations as whipsaw, price outliers, tolerance, false breaks, or fakeouts.
Pattern Analysis and Market Direction: When analyzing patterns like rising wedges, it's important to consider their inherent bias. In the case of a rising wedge, the breakout tends to be against the wedge's direction.
*A rising wedge typically exhibits decreasing volume and involves a minimum of 3 weeks for pattern formation. Upward breakouts are discouraged within this pattern.
Indicator Suitability in Market Conditions: The effectiveness of indicators like Stochastic (Stoch) and Relative Strength Index (RSI) varies with market conditions. These indicators excel in ranging markets but might yield less accurate results in trending markets.
*During sideways movements, Technical Indicators especially Stochastic and RSI are perfectly used as overbought, oversold and crossover markers, as in this case. In trending movements, these indicators are also used as momentum in divergence analysis. These indicators can't stand alone, in other words it must be combined with other analyses tools.