Will Pepsi go for a fresh record high?

PepsiCo Inc. (NASDAQ: PEP) traded higher yesterday, closing above the 138.50 barrier, which acted as the upper bound of the sideways range that contained the price action from back April 6th. From a technical standpoint, this increases the stock chances of moving further north, a view supported by the fact that the drinks and snacks company beat its earnings estimates for the third quarter today. Overall, we will adopt a positive stance with regards to this stock.

If investors continue to increase their exposure in this stock, we could soon see the price hitting the 144.00 territory once again. That zone is marked as a resistance by the highs of September 2nd and 3rd, and also coincides with the 161.8% Fibonacci extension level of the aforementioned range’s width. If the advance does not stop there, the next target to consider may be the record high of 147.19, hit on February 18th. A break higher would take Pepsi into uncharted territory, with the next possible resistance zone perhaps being the 261.8% Fibonacci extension level, which is at around 154.00.

Taking a look at our daily oscillators, we see that the RSI stands above 50 and points up, while the MACD, although fractionally negative, lies above its trigger line and looks ready to obtain a positive sign soon. Both indicators suggest that the stock may have started picking up upside speed, which enhances the notion for further advances in the foreseeable future.

In order for the outlook to turn bearish, we believe that a dip below the low of June 15th, at 126.40, is needed. Such a move could confirm the downside exit out of the pre-mentioned range and may set the stage for declines towards the low of April 1st, at around 115.85. Another break, below 115.85, could pave the way towards the 109.45 hurdle, marked as a support by the low of March 24th.


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