Medium term
Trade view / 02 June 2016 at 9:20 GMT

Monster Beverage Corp – a fast-moving trade is setting up

Trader /
United States
Instrument: MNST:xnas
Price target:
Market price:

Shares of energy drinks manufacturer Monster Beverage Corp (MNST:xnas) have seen some wild swings already this year. While the jury is still out as to the stock's path of least resistance through a six to twelve month lens, in the near term a better directional move higher or lower looks to be in the cards very soon.

When Monster Beverage reported its latest quarterly results in late April it posted better than expected results as a result of distribution improvements through its partner Coca-Cola Co. The stock surged after the news but has been in a consolidation phase since.

On the multi-year weekly chart we see that MNST stock has largely been consolidating in a wide and choppy range since February 2015. This consolidation phase is taking place in a broadening top formation, which is concerning but for now also note that at the February and April lows the stock held its blue 100-day simple moving average as support.

Monster Beverage Corp
Source: eSignal

On the daily chart note that since gapping higher after earnings in late April MNST stock has been consolidating in a tightening price formation, which we may label as a wedge formation. The stock now also sits right upon its eight and twenty-one day simple moving averages. Very simply, once the stock makes a clear directional move either up or down on a daily closing basis that pushes it out of this consolidation range, then traders can jump on a trade in said direction. 

Monster Beverage Corp
Source: eSignal

Management and risk description

From a risk management perspective it is important to keep in mind that shares of Monster Beverage can be a quick mover, which is to say that operating with reduced size and somewhat wider stops makes sense.


Entry: Buy MNST stock or CFD upon a daily close above $152.50. Alternatively, sell/short the stock or CFD upon a daily close below $149.

Stop: Upon a  break higher – $148. Upon a break lower – $153.

Target: Upon a  break  higher – $160. Upon a break lower – $140.

Time horizon: 2–4 weeks

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more


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