Constellation Brands shares traded sharply higher in premarket trading Tuesday after Warren Buffett’s Berkshire Hathaway disclosed a new investment in the beer and spirits maker.
The stock looks set to break out above the upper trendline of a falling wedge pattern in Tuesday’s trading session, possibly paving the way for upside reversal.
Investors should track key overhead Fibonacci levels on the Constellation Brands chart around $187, $204, $218 and $231, while also watching an important support level near $160.
Constellation Brands (STZ) shares jumped in premarket trading Tuesday after Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) disclosed a new investment in the beer and spirits maker.
According to a Form 13-F regulatory filing released on Friday, the Omaha-based conglomerate purchased 5.6 million shares of Constellation Brands in the fourth quarter, with the stake having a market value of $1.24 billion as of Dec. 31 last year.
Some of the alcoholic beverage producer’s better-known wine brands include Meiomi, Robert Mondavi and Kim Crawford, while its Modelo Especial lager surpassed Bud Light in 2023 as the top selling beer in the U.S.
Constellation Brands shares were down 26% since the start of the year through Friday’s close amid softening consumer demand and concerns that potential tariffs on Mexican goods could force the company to raise prices. The stock was up nearly 7% at $174 in recent premarket trading.
Below, we break down the technicals on the Constellation Brands chart and identify key price levels worth watching out for.
Since the 50-day moving average (MA) crossed below the 200-day MA to flash a death cross in August last year, Constellation Brands shares have trended sharply lower, with the price more recently forming a falling wedge chart pattern.
While the relative strength index (RSI) signals bearish price momentum with a reading below the 30 threshold, the indicator also points to oversold conditions, increasing the likelihood of a potential bounce.
Indeed, the stock looks set to break out above the pattern’s upper trendline in Tuesday’s trading session, potentially paving the way for an upside reversal.
Let’s apply the Fibonacci retracement tool from the stock’s April 2024 high to February 2025 low, helping us locate several key overhead areas where the shares could run into selling pressure. We’ll also identify a key support level worth watching.
The first overhead area to watch sits at the 23.6% Fib level around $187. This location on the chart may also provide resistance near the upper range of a brief consolidation period last month that formed within the falling wedge pattern.
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