Key Takeaways
- United shares stabilised Friday after a series of price swings. Investors are assessing the impact economic uncertainty may have on the airline’s outlook.
- The stock ran into selling pressure near the upper trendline of a descending broadening formation and 200-day moving average during Wednesday's rally that saw the stock register its highest daily volume since October last year.
- Investors should monitor major support levels on United's chart around $56 and $48, while also watching crucial resistance levels near $81 and $91.
United Airlines’ (UAL) shares stabilised Friday after a series of price swings. Investors are assessing the impact that economic uncertainty will have on United Airlines’ outlook.
United’s stock may experience further volatility in the near term as market observers prepare for the company earnings to be announced after Tuesday’s closing bell.
Investors are likely to focus on the airline’s comments about its full-year forecast and watch to see whether it follows Delta (DAL), that reported better than expected earnings this past week, by reducing capacity to handle softer demand.
United shares have lost a third of value since the beginning of the year, amid fears that a tariff-induced slowdown in the economy could dampen demand for leisure and business travel. United shares were trading at just below $63 in the early afternoon of Friday.
Below, we examine United’s chart with a focus on technical analysis and highlight key price levels to watch.
Descending Broadening Formation in Focus
Since mid-February, United’s shares have been trending down in a descending formation. More recently, the price was under selling pressure at the pattern’s upper tendency line and 200-day moving mean during Wednesday’s rally. The stock registered its highest volume since October of last year.
The relative strength index (RSI), however, has recovered from oversold levels and remains below the neutral 50 reading of the indicator.
Let’s identify the major levels of support and resistance on United’s chart.
Major Support Levels to Monitor
The shares could initially drop to around $56. Investors might look for buying opportunities if the shares retrace to this week’s lows. The chart shows that these lows are very close to several prominent peaks dating back to June 20,23.
The next level below that is $48. This area could offer support near the notable peaks of the chart in July and April last year.
Important Resistance Levels to Watch
Shares could soar to $81 if they continue to be bought. Investors who have purchased the stock below the current price could look for exits in this region, near the swing-high of last month or the upper level during a short consolidation period which preceded November’s breakaway gap.
Finally, if you buy above this level, it will set the stage for another attempt at resistance near $91. United shares might be under pressure to sell near the pullback low from December and a minor anti-trend high that appeared on chart in early march.
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