Sharks in the Coffee at Dunkin’ Donuts

• Posted by Greg Harmon
• on July 14th, 2016

Dunkin’ Brands ($DNKN) will always be known as Dunkin’ Donuts in my house. Yes we always went for the coffee when we lived in Boston. Starbucks was just starting to be a thing but I lived in Dunkin’ Donuts wheelhouse. With the growth of Starbucks came the innovation to the coffee side of the house. Premium coffee, espresso and latte drinks. But recently they have taken coffee to a new level. Three are sharks in the coffee at Dunkin’ Donuts.

Well there are sharks swimming in Dunkin’ Brands stock price at least. The chart below shows the pullback in the stock from July 2015 to a low in February. Since that low the stock ran higher into mid April. Since then the back and forth action has done two things. It retraced 61.8% of the leg higher. And it created a Harmonic Shark pattern. The Shark carries two Potential Reversal Zones (PRZ), one at 88.6% of the XA leg and the second at 113% of that leg. That gives an upside target to about 48.84 to 50.50.

But if that were not enough to look for upside, all of this price action is nested with in an even bigger Gartley pattern (yellow). This harmonic carries a PRZ at 52.47. So take your pick for a target: 48.84, 50.50 or 52.47. The momentum indicators also support the upside. The RSI is moving into the bullish zone and the MACD is crossed up and rising. With the move over the B level in the Shark the trigger is active against a stop at about 44.50.

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