Key Takeaways
UnitedHealth Group ( UNH ) shares have been on the decline since the CEO of its UnitedHealthcare unit was killed in New York City on Dec. 4.
The stock’s slide, which has significantly contributed to the Dow Jones index recording its longest losing streak in 50 years , has also been compounded by recent pressure from Washington targeting pharmacy benefit managers (PBMs) , third party administrators that oversee drug programs on behalf of major insurers, such as UnitedHealth.
Earlier this week, lawmakers unveiled a federal spending bill that included a range of PBM proposals focusing on spread pricing, rebates, and reporting transparency. However, analysts say the bill allows PBMs ample time to adjust their business practices, resulting in minimal impact on health insurers’ earnings.
UnitedHealth shares fell 2.1% to $489.25 on Thursday and are down 20% since Dec. 4. The stock has lost 7% since the start of the year.
Below, we take a look at the technicals on UnitedHealth’s weekly chart to identify key price levels worth watching.
200-Week Moving Average Provides Historical Support
After setting a new record high in early November, UnitedHealth shares traded sideways for several weeks before commencing their sharp move lower earlier this month on some of the highest volume since the 2020 pandemic low.
However, the stock found buying interest around the 200-week moving average (MA) in Wednesday’s trading session. Interestingly, the last two times the price has closed below this closely watched indicator on the weekly timeframe —in March 2020 and April this year—the shares rebounded 41% and 19%, respectively, over the next five weeks.
Let’s identify several crucial support and resistance levels on UnitedHealth's chart that investors may be closely monitoring.
Crucial Support Levels to Watch
Selling below the 200-week MA could trigger a fall to around $460. Investors may look for entry points at this level near a trendline that connects the November 2021 peak with multiple troughs on the chart between January 2022 and April this year.
A close below this level could see the price revisit lower support near $430, a location on the chart where buyers may accumulate shares around prominent swing highs that formed in May and August 2021.
Key Resistance Levels to Monitor
Upon a recovery in the share price, investors should initially monitor how the stock responds to the $550 level. This location, currently just above the 50-week MA, could provide resistance near a horizontal line that links an array of comparable price points on the chart from April 2022 all the way to December this year.
Finally, a more bullish reversal could propel a move up to around $610. Investors who have purchased shares at lower levels may look to lock in profits near a period on consolidation situated just below the stock’s record close.
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