Essential Make or Break Level Brewing in Keurig Green Mountain Coffee GMCR

May 4, 2015: 12:36 PM CST

“Will it break or will it hold?”

That is the key question facing traders as Keurig Green Mountain (GMCR) sets up a major “make or break” support bounce or bearish short-sell liquidation play off a critical support reference level.

Here’s the level clearly highlighted – along with a Descending Triangle – on the Daily Chart:

After a negative divergence, bearish weekly candle pattern, and huge distribution bar struck shares in November 2014, sellers have dominated GMCR as price collapsed roughly 30% from $157 to the current $110 critical support level.

Note the red arrows on the way down as price reversed each time from the falling 50 day EMA (blue).

Keep in mind that these opportunities are low-risk short-sell trade set-ups to enter a downtrending stock.

However, buyers have countered the downtrend with a horizontal support shelf into the $110.00 per share level and we once again find the stock pivoting at this critical reference level.

Will buyers again win the battle, forcing price back to the $117.50 level off $110.00 or will this time be the breakdown event, resulting in a likely sell-swing and breakdown event that continues the downtrend?

Let’s look to the weekly chart for additional clues and targets:

GMCR experienced a large bullish surge and reversal up in mid-2012 from the $20.00 per share level to the impressive heights above $150 achieved in late 2014.

However, volume and momentum divergences  – along with a huge bearish engulfing distribution weekly candle – triggered a reversal and downtrend that took shares back into our current pivot level.

Note the $110 is not just an important support/inflection level in 2015 – it expands back to 2014.

What’s the play here?

We are seeing positive divergences into the $110.00 level and we’ll reference it as the “edge of the cliff” support spot where buyers can enter aggressive support-bounce strategies.

Note a possible upside inflection target confluence into the $120.00 per share level (overlapping 20 and 50 week EMAs) if indeed buyers are victorious.

Place stops under this level because shares could collapse quickly as buyers become sellers – and sellers become aggressive – on a trigger-breakdown under the $110 support shelf.

Logical downside targets include $100.00 (“Round Number Reference”) and then the $90.00 per share level (May 2014 reversal low).

Incorporate these planning levels into the strategies you may be using already with GMCR.

Keep in mind that Keurig will announce its earnings Wednesday which could be a catalyst for quick movement away from the $110.00 level.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Essential Make or Break Level Brewing in Keurig Green Mountain Coffee GMCR”

  1. Farooqi Says:

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