Key Takeaways
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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As of the date this article was written, the author does not own any of the above securities.
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