Jun 02

Coca-Cola: Further Upsides Expected

 

Coca-Cola (NYSE:KO) consolidates its advance developed in the second half of May, which was boosted by the expectations on the reopening of the activity.

On the technical side under the Elliott wave perspective, Coca-Cola advances in an incomplete wave B of Minor degree labeled in green, which charted in the March low at $36.31 per share. Coca-Cola, in its 2-hour chart, exposes a mid-term downward process that began on February 21st, when the price found sellers at $60.13 per share. The massive sell-off developed in three waves of Minute degree in black dragged to KO to ease over 39%.

Once the price ended its first bearish leg identified as wave A of Minor degree in green on March 21st, Coca-Cola found fresh buyers that made Coca-Cola advance in a second leg corresponding to wave B in green. This second movement of the upper degree corresponding to wave B in green looks incomplete. At the same time, in the chart, we distinguish that KO could be running on its wave ((c)) of Minute degree labeled in black.

The structure observed in the intraday ascending channel reveals that the upward sequence corresponding to wave ((c)) in black could be developing a formation (i)-(ii)-i-ii. This structure implies that wave (iii) could be an extended wave, and its advance could drive Coca-Cola to surpass the end of wave (a) of wave B at $49.73 per share, and even to strike the descending trendline that connects the origin of wave A with the end of wave (b) of A.

Supported by the alternation principle, considering that wave (b) has elapsed in a vast quantity of time, and its range is tight compared to wave (a), there exists the possibility that wave (c) will be similar to wave (a) in terms of price. This scenario leads us to consider the potential target near $57 per share. On the other hand, considering that the current move is part of an incomplete corrective structure of an upper degree, long positions should be limited until the completion of wave B.

In conclusion, as long as Coca-Cola remains above $44.68 per share, our preferred short-term positioning remains on the bullish side.