Green Mountain Coffee Roasters: 2 Potential Scenarios
PikerTrader | Mar 07, 2013 07:29AM ET
Green Mountain Coffee Roasters (GMCR) has rallied over 15% off its lows on 2/26. It has now hit some resistance and has been hovering around the low 49′s for the last few days and fails at resistance at 49.36.
There are two scenarios for GMCR at this point, that will produce movement in the stock. The bullish scenario is that has formed an ascending triangle pattern which can only go upwards if it breaks through the resistance first at 49.53. The 49.53 resistance is coming from broken support from last year.
The resistance is coming from the a failed swing high from May of 2012 before it dropped 50% lower. This resistance levels is strong since it is an opportunity for longs to sell that rode through the 50% drop and an opportunity to short again at a level that produce a 50% drop. With this strong of resistance it is possible to see GMCR fail here and this would produce the bearish scenario. Where this is another failure at the level and GMCR sells off to test its trendline at 43.50.
Overall GMCR looks bullish if it can get above 49.53, but if it falls to get above that and drops below 48.70, there is a good chance GMCR drops to 49 then to 43.50.
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