Starbucks (SBUX) Readies To Head Lower If “Whole Psych” Level Is Broken

The more of these videos you watch, the more you should understand our approach to trading. It isn’t an overly complicated process, in fact, we pride ourselves on the simplicity of our trading. No excessive use of indicators where you’re not sure what they mean or how they are used. Just looking for support and resistance, allowing price to be our guide.

For our trade idea today on Starbucks (SBUX), we have another pretty straight forward set up. However, this time, we will introduce some indicators to look out for and how we can use them to confirm a possible trade to the downside.

First, the levels to watch. Here there is one major level to keep an eye on and that level is 100. It is a major level, not only because it has been tested as a support and resistance level through the past few months, but also because special attention should be paid to whole psych numbers. What is a “whole psych number?”

These are levels that usually end in 0 or 5. These levels play an important role for many traders to determine where they should take trades, or at the very least, where to watch for a potential trade given how price action and volume react at these levels.

In this case, you also have two moving averages converging at this level as well. Moving averages can often act as support or resistance also, especially when they meet at such a major price. This is what we will watch for a potential breakdown. If price breaks this level, as well as the moving averages, we would expect lower prices in the future.

To find out where our target is, we need not look any further than the next strongest level where price met resistance or support in the past. Here, that level appears to be around 97. If you’re ever confused on how we find levels, it is easier than you might think.

We are simply looking for areas (prices) on the chart where price has bounced or rejected more than twice, confirming there are bigger players in these areas who had orders ready to fill or where they have mad trades to move the price. For you and I, we don’t have the same kind of juice as the big players, so we can’t move the market as much as they can.

However, to have the best chance as success in trading, we have to learn to trade with the pros, not against them, for this very reason. Be sure to watch SBUX and this 100 level in order to take another possibly lucrative trade and stay tuned for more free options trading education here.

Learn to trade like this for yourself when you join The Profit Machine. There, you’ll learn all about my favorite stocks, setups, strategies, and plenty more. You’ll also be invited to weekly webinars where I answer questions and go over important trading lessons, like the one in today’s article. The best part, you’ll also receive live trade alerts. Not only will you get a world-class education, but you’ll earn while you learn.