Takeaways
- Humana shares rose 11% in extended trading Monday after the federal Government announced that it would pay Medicare insurers a higher amount next year than expected.
- The stock broke down below a symmetrical triangle in Monday’s trading session before staging an impressive intraday reversal to close above the pattern's lower trendline, signaling a bullish shift in investor sentiment.
- Investors should watch key overhead areas on Humana's chart around $300, $336, and $383, while also monitoring an important support level near $213.
Humana (HUM), shares of which were extended on Monday, soared after the federal government announced that it would pay Medicare insurers a higher amount next year than expected.
The Centers for Medicare & Medicaid Services (CMS) said payments for 2026 Medicare Advantage health plans run by private insurers will increase by 5.06% on average, more than the 2.83% the government initially proposed in January. The increased rates will benefit giants in the health insurance industry, such as Humana. Humana has been struggling with rising medical costs related to government-backed healthcare plans.
Humana shares have been flat since the beginning of the year, as of Monday’s closing, but have fallen nearly 20% in the past 12 month due to rising medical costs, downgraded Medicare options, and a decline in membership signups. In Monday’s after-hours trading, the stock climbed 11% to reach $283.50.
Below, we look at Humana’s chart and apply a technical analysis in order to identify key levels of price that are worth paying attention to.
Symmetrical triangle in play
Humana’s shares have been trading in a symmetrical Triangle since October, a chart pattern that indicates a period of consolidation prior to the price breaking out.
The stock fell below the pattern during Monday’s trading before staging a dramatic intraday reversal, closing above its lower trendline. This signaled a bullish shift of investor sentiment.
The shares are expected to open sharply higher Tuesday morning, possibly setting the stage for an upside trend reversal on a longer term basis.
Let’s identify the three major technical overhead areas in Humana’s chart. We’ll also locate a key support level that’s worth monitoring if Humana resumes its established downward trend.
Watch out for these key areas in the sky
A breakout above a symmetrical triangle upper trendline may see the shares initially testing the psychological $300 area. This level could provide significant overhead support near the 200-day MA and several prominent peaks on the chart dating back to early last year.
The next area of interest is located around $336. Investors who bought at lower prices can look for opportunities to profit in this area near the peak of March and April.
Further buying could drive the stock to the $383 region. The share could face selling pressure in the region near swing-highs that appeared on the chart in September and January last year. This location also roughly corresponds with a measure move upward target that calculates distance of the symmetrical triangular pattern near its widest part and adds this amount to the top trendline.
Important Support Level Worth Monitoring
Investors should be on the lookout for the $213 level if Humana shares resume a long-term downtrend. This area is likely to attract a lot of attention near the October gap low from last year, which also marks lowest point in the symmetrical triangular pattern.
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As of the date the article was written, author does not own any above securities.
