Take a look at the 1-year chart of Starbucks (NASDAQ: SBUX) below with my added notations:
SBUX has formed a relatively clear up-channel chart pattern over the last 5 months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to channels, remember that any (3) points can start the channel, but a 4th point or more confirms it. You can see that SBUX has several points of channel resistance (red) and support (blue).
The Tale of the Tape: SBUX has formed an up-channel. A long trade could be entered on a pullback down to the channel support, which is currently approaching $56. Short opportunities would be on rallies up to channel resistance, which the stock just hit, or on a break of channel support.
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