Over the past few months, Kraft Heinz (KHC) has continued its decline, with price action trending lower since July, and the stock is now down more than 18% from its July highs. This decline occurred despite the company generating healthy profits and continuing to pay a dividend, making the recent price behavior particularly noteworthy from a technical standpoint. When a stock drifts lower even with fundamentals holding steady, I pay very close attention to the structure forming on the chart.
Technically, there is a very clear trend line that I am currently monitoring on KHC. This trend line is drawn from the pivot high on July 30 to the pivot high on November 26, creating a well-defined sloping resistance line. These two axes create a clean technical reference point, and price respecting this level over time gives added importance to the trend line. In my experience, respectable trend lines like these often serve as decision points for the next meaningful move.
What makes this setup particularly interesting is the bullish impact of a breakout above this downtrend line. A decisive move through this level would represent a shift in character, indicating that sellers who have controlled the stock since July may lose control. From a technical standpoint, this type of trend line break can often act as a catalyst for a larger breakout move, especially when the trend line has been tested multiple times.
In terms of execution, there are two basic approaches that I would look to trade this setup. The first is to enter a buy trade upon a clear breakout above the trend line itself. The second approach is to wait for a breakout, followed by a bounce to the trend line, and then look for confirmation before entering. Both methods allow traders to participate in a potential upward movement while still anchoring decisions around clearly defined technical levels.
For those who don’t know much about Kingdom Holding Company, Kraft Heinz is a major food company that has remained the focus of attention of many market participants due to its earnings and dividend performance. However, price action ultimately tells the story, and now the chart remains where the focus is. I always let technicals guide my bias, especially when a stock is approaching a major inflection point like this.
As always, no matter how attractive a setup, proper risk management is essential. Clearly defining risk, position size and invalidation levels is a non-negotiable part of my process when trading stocks.
