Key Takeaways
- United Parcel Service shares moved higher Wednesday after falling yesterday to their lowest level in nearly five years.
- 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.
- Key support levels in play on the UPS chart sit around $101 and $90, while important overhead areas lie at $125 and $160.
United Parcel Service (UPS) shares were gaining ground Wednesday after falling yesterday to their lowest level in nearly five years.
Shares in the logistics firm have remained under pressure since disappointing investors in January with weaker-than-expected fourth quarter results, announcing at the time it was significantly reducing its volumes with e-commerce titan Amazon (AMZN). Sentiment surrounding the stock may have also taken a hit Tuesday after Bank of America trimmed its UPS price target, pointing out that weak volumes and tariff uncertainty could weigh on the company’s first-quarter earnings.
UPS shares, which closed Tuesday at their lowest level since June 2020, have lost about a quarter of their value over the past 12 months amid weakening delivery demand and concerns of increasing competition with key rival FedEx (FDX). The stock was up about 1% at $111 on Wednesday afternoon.
Below, we take a closer look at the UPS weekly chart and apply technical analysis to identify key price levels that investors may be watching out for.
Falling Wedge in Focus
Since setting their record high in February 2022, UPS shares have traded within a falling wedge, a chart pattern that can signal a bullish reversal upon an upside breakout.
However, in the short-term, the stock appears more likely to break down, with the price recently declining to the formation’s lower trendline on increasing volume. What’s more, the relative strength index (RSI) continues to move lower towards oversold levels, confirming the stock’s weakening price momentum.
Let’s identify two key support levels on the UPS chart that may come into play amid the potential for further selling, while also pointing out important overhead areas to monitor during possible upswings.
Key Support Levels in Play
A decisive breakdown below the falling wedge pattern’s lower trendline could see the shares initially drop to around $101. This level would likely provide support near the prominent March 2018 swing low and Covid-era 2020 rebound high.
Selling below this area could trigger a drop to lower support at the $90 level. Investors may seek to accumulate shares in this location close to a trendline that connects the December 2018 trough and a series of prices situated just above the Covid selloff low.
Important Overhead Areas to Monitor
During upswings in the stock, investors should monitor how the price reacts around the $125 area. This region on the chart may provide overhead resistance near a horizontal line that links multiple peaks and troughs on the chart extending all the way back to December 2017.
Finally, a breakout above the falling wedge pattern’s upper trendline may see UPS shares climb to the $160 level. Investors who have purchased the stock at a lower price could look to lock in profits near a series of comparable price points on the chart from August 2020 to March last year.
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