PepsiCo, Inc. rebounded after a 35% drop.
Bullish reversal pattern signals a trend change.
Price reclaimed the 200-day moving average.
Prior highs act as the next upside target.
Key support levels now define downside risk.
Long-Term Trend Breakdown and Support Test
The stock of PepsiCo, Inc. (PEP) is starting to look interesting following its 35% decline to a low of $127.60 in June 2025. PEP hit a peak of $196.88 in 2023, before finding resistance and trending lower. Resistance was seen near the top of a large rising trend channel, leading to a bearish reversal that eventually tested support at the lower boundary of the channel. Support at the trendline eventually failed with sellers taking control into the $127.60 low. After weeks of testing support near the channel’s uptrend line, sellers ultimately gained control and drove prices lower.
PepsiCo Weekly Chart – Inverse Head & Shoulders
Breakout Signals Trend Reversal
Since a subsequent low at $127.60, PEP has rallied back to the trendline and successfully tested it as resistance. That high established the next anchor for a small neckline of an inverse head and shoulders pattern. A decisive breakout of the trend-reversal pattern triggered several weeks ago. Moreover, strength was indicated by a recovery of the uptrend line, the 200-day moving average at $165, and a downtrend line across the top boundary of the bearish correction, all within the same week.
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Upside Targets and Channel Resistance
This behavior shows underlying strength and improving demand. The recent peak of $196.88 is an initial upside target for the stock, provided it remains above the 200-day average. With the bearish correction likely complete, as suggested by the head and shoulders breakout and reclaim of the 200-day line, the top channel line becomes a potential target. Keep in mind that the trend channel is relatively large, but it has been intact for years and therefore provides a potentially significant range for PEP to trade in. A 127.2% Fibonacci extension at $215.72 can be used as a proxy for the top line for the time being.
PepsiCo Weekly Chart – Long-Term Rising Channel
Key Support Levels to Watch
The drop through trendline support was bearish, and the subsequent recovery from a classic bullish reversal pattern is bullish. Key areas to watch for signs of support during weakness include the breakout level and neckline of the head and shoulders bottom formation, at $157.80 and $153.89, respectively. The relationship to the 200-day line at $164.59 is helpful as a guide, but until it is clearly confirmed as support or resistance, it should not be reliable as a precise price level.
Long-Term Moving Average Context
Note that until a break below the 200-day average in late October 2024, PEP had largely traded above the 200-day average, other than for short periods, since April 2010. Therefore, a sustained recovery of the 200-day average would show buyers back in control.
Short-Term Outlook
In the short term, PEP may either consolidate near the recent high of $171.48 and form a bullish continuation pattern or pull back to test support before the advance resumes. Nevertheless, recent bullish signs noted above suggest that an uptrend in PEP may have further room to develop before approaching anything near a completion.
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