Coca-Cola Flashback: The Unfilled Gap Held, and Now Wave 5 Is in Play

Good day to everyone! Coca-Cola ($KO) is a nice example of how a gap and a wave count can work together, so let me take you back to the chart I shared on October 2.

At that time, KO was pulling back in three waves from the highs and moving into an unfilled gap from the July earnings, around 84. The structure looked like a wave 4 pullback inside a possible ending diagonal, so I was looking for one more push higher in wave 5, with support at 81.92 and the bigger invalidation level at 78.69.

Since then, the stock found its low near 85 and has rallied to about 91.80, right below the wave 3 high.

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Now the picture is simple. KO is in wave 5, which means we are in the late stages of a five-wave move, and that carries a risk of a turn. The 0.618 extension of the move sits near 96.70, which is the area where wave 5 could finish. The wave 4 low at 85.19 is the level to watch, and a move back below it would signal that the top may already be in, with 81.92 support and 78.69 invalidation below.

Trade well,

Grega