Takeaways
- United Parcel Service shares rose Wednesday after falling to their lowest levels in nearly five years yesterday.
- Since setting their record high in January 2022, UPS shares have traded within a falling wedge, with the price recently declining to the pattern's lower trendline.
- The UPS chart shows that the key support levels are $101 and $91, while important overhead levels are $125 and $160.
United Parcel Service (UPS), shares gained ground on Wednesday after falling to their lowest levels in nearly five years yesterday.
The shares of the logistics company have been under pressure ever since it disappointed investors in January by announcing that it would be significantly reducing its volume with ecommerce giant Amazon (AMZN) at the time. The stock’s sentiment may have been affected Tuesday by Bank of America’s lowering of its price target. They cited that weak volumes and uncertainty over tariffs could affect the company’s first-quarter earnings.
UPS shares, which closed on Tuesday at their lowest levels since June 2020, lost a quarter of value in the past year due to a weakening of delivery demand and increased competition with FedEx (FDX), whose shares are a key rival. The stock was up 1% to $111 on Wednesday.
Below, we look at the UPS Weekly Chart and apply technical analysis in order to identify key levels of price that investors might be on the lookout for.
Falling Wedge in focus
Since their record high in Febuary 2022, UPS shares traded within a falling equilateral triangle, a chart that can signal a bullish turn around upon an upward breakout.
The stock is more likely to crash in the short term, as the price has recently fallen to the lower trendline of the formation on increasing volume. The relative strength (RSI), a measure of stock price momentum, is also moving lower, towards oversold areas.
Let’s identify the two key support levels that could come into play if there is a potential for further sales. We will also highlight important overhead areas to watch during possible upswings.
Key Support Levels of Play
If the stock price drops below the lower trendline of the falling wedge pattern, it could initially fall to around $101. This level is likely to provide support near March 2018 swing-low and Covid’s 2020 rebound high.
Selling below this level could cause a drop towards the lower support of $90. Investors might want to buy shares near a trendline connecting the December 2018 low and a series prices just above the Covid saleoff low.
Important Overhead Areas To Monitor
During stock upswings, investors should watch how the price reacts near the $125 mark. This area on the chart could provide overhead resistance near the horizontal line that links several peaks and valleys on the graph extending back as far as December 2017.
UPS shares may reach $160 if they break out above the upper trendline of the falling wedge pattern. Investors that purchased the stock earlier could lock in profits at similar price points from August 2020 through March last year.
Investopedia’s comments, opinions and analyses are intended solely for informational purposes. Read our warranty and liability disclaimer for more info.
As of the date of this article, the author did not own any securities listed above.
