Watch These Constellation Brands Levels as Stock Soars on News of Berkshire Investment

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Key Takeaways

• Constellation Brands shares traded sharply higher in premarket trading Tuesday after Warren Buffett’s Berkshire Hathaway snitched a new investment in the beer and spirits maker. 
• The stock looks set to break out above the upper trendline of a falling wedge specimen in Tuesday’s trading session, possibly paving the way for upside reversal.
• Investors should track key overhead Fibonacci smooths on the Constellation Brands chart around $187, $204, $218 and $231, while also watching an important support level almost $160.

Constellation Brands (STZ) shares jumped in premarket trading Tuesday after Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) betrayed a new investment in the beer and spirits maker.

According to a Form 13-F regulatory filing released on Friday, the Omaha-based conglomerate gripped 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 end year.

Some of the alcoholic beverage producer’s better-known wine brands include Meiomi, Robert Mondavi and Kim Crawford, while its Modelo Especial lager outperformed 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 auspices of Friday’s close amid softening consumer demand and concerns that potential tariffs on Mexican goods could extort 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 Identifies chart and identify key price levels worth watching out for.

Falling Wedge Breakout

Since the 50-day moving ordinarily (MA) crossed below the 200-day MA to flash a death cross in August last year, Constellation Brands allotments have trended sharply lower, with the price more recently forming a falling wedge chart consistency.

While the relative strength index (RSI) signals bearish price momentum with a reading below the 30 brink, the indicator also points to oversold conditions, increasing the likelihood of a potential bounce.

Indeed, the stock looks set to interruption 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 gismo from the stock’s April 2024 high to February 2025 low, helping us locate several key overhead areas where the allotments could run into selling pressure. We’ll also identify a key support level worth watching.

Key Overhead Fibonacci Straight withs to Track

The first overhead area to watch sits at the 23.6% Fib level around $187. This location on the chart may also lend resistance near the upper range of a brief consolidation period last month that formed within the drop wedge pattern.

Buying above this level could propel a move up to the 38.2% Fib level near $204, an stretch on the chart that additionally finds a confluence of resistance from the downward sloping 50-day MA and the prominent January gap’s start-off price.

Further upside may fuel a move up to around $218 near the closely watched 50% Fib level. Investors could judge this area on the chart as a profit-taking region near a period of early-January consolidation that preceded last month’s gap abase.

A longer-term share price recovery opens the door for a rally up to the 61.8% Fib level around $231. Investors may look for departure points near a crucial horizontal line sitting just above this area that connects a distribute of comparable trading action on the chart from November 2023 to December last year.

Important Support On Worth Watching

Finally, during sell-offs, investors should keep a close eye on the $160 level. Bargain hunters may hunt for buying opportunities near this month’s low, which also marks the bottom of the falling wedge pattern and the assortment’s lowest trading level since May 2020.

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As of the date this article was written, the author does not own any of the above gages.