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Key Takeaways
- Shares in package delivery giant FedEx surged nearly 14% in premarket trading Wednesday after the company topped Wall Street’s quarterly earnings estimates and provided an optimistic outlook.
- The company’s stock has traded within a narrow 6% range over the past six weeks on below-average volume, increasing the likelihood of a significant move post-earnings.
- Monitor if FedEx shares can close above the top trendline of a channel around $285, a move that that could lead to follow-through buying in upcoming trading sessions.
- The measuring principle, which calculates the distance between the channel’s upper and lower trendlines and applies that amount to the breakout point, projects a potential price target of $340.
Shares in package delivery giant FedEx (FDX) moved sharply higher ahead of Wednesday’s opening bell after the company topped Wall Street’s quarterly earnings estimates and provided an optimistic outlook, as it undergoes a broad cost-cutting plan.
Below, we take a look at the FedEx chart and identify key technical levels to watch out for.
Rangebound Conditions Leading Into Quarterly Results
Zooming out to the weekly chart, FedEx shares have remained mostly rangebound within a channel since the 50-week moving average (MA) crossed above the 200-week MA to generate a golden cross pattern in early October last year.
Retracements over this period have generally found support around the 200-week MA positioned near the channel’s lower trendline. Moreover, these pullbacks correspond with relative strength indicator (RSI) readings just below 50, indicating neutral conditions.
More recently, the delivery company’s shares have traded within a narrow 6% range over the past six weeks on below-average volume, increasing the likelihood of a significant move post-earnings. Indeed, the shares sit positioned to open sharply high on Wednesday after the company’s better-than-expected quarterly results.
FedEx shares were up nearly 14% at $292.00 in premarket trading.
Levels to Watch Following Post-Earnings Pop
Following the stock’s earnings-driven pop, investors should monitor if the price can close above the channel’s top trendline around $285, a move that could lead to ongoing buying in upcoming trading sessions.
To determine a potential price target, investors can use the measuring principle. We do this by calculating the distance between the channel’s upper and lower trendlines in dollars and applying that amount to the breakout point. In this case, adding $55 to $285 projects a $340 price target. Using this technique provides an indication of where the stock may be headed next if the upward momentum continues.
It’s also worth keeping in mind that the stock may encounter selling pressure around its all-time high (ATH) set in May 2021 at $319.90.
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As of the date this article was written, the author does not own any of the above securities.