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After Starbucks' pullback this month, technician sees new highs ahead

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After Starbucks' pullback this month, technician sees new highs ahead

Starbucks has cooled off this month.

The stock went from hitting a record as recently as July to falling nearly 6% just this month.

One technician sees another breakout on the horizon, and it could sweep the shares back to highs.

"I've seen the stock pull back little bit, but still the uptrend I view is well intact. I'd like to take the opportunity in this pullback to get a little leverage in the options market," Todd Gordon, founder of TradingAnalysis.com, said Tuesday on CNBC's "Trading Nation."

Gordon said the technical set-up suggests a return to new highs. He's basing this on its Bollinger Bands, a trading range which marks highs and lows in a stock based on its moving average.

"With Bollinger Bands, if the stock gets a little extended like it did [in July], you'd expect to return and it test the lower Bollinger Band like we saw [in August], a little bit of consolidation, tested the lower band but then we've just seen a nice drop, sort of a double bottom [in September] below the Bollinger Bands and it looks like the stock is trying to come back to life," he said.

Gordon also sees a level of support forming below the current trading price stemming from its uptrend since July 2018.

Gordon is doing a two-step trade to bet on a move higher but cap risk. He is selling the October 18 expiration 90 put and buying the 85 put. Then, he's buying a higher call debit spread – he is buying the October 18 expiration 95 call and selling the 100 call.

"If we're right, we will be able to get a move above and hopefully to new highs," Gordon said.

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