Watch These Pfizer Price Levels as Stock Gains After Report of Starboard Taking Stake

Pfizer (PFE) shares have gained ground since theThe Wall Street Journal reported over the weekend that activist investor Starboard Value has taken a roughly $1 billion stake in the drug maker and is pushing for changes at the company.

Since setting its pandemic-era high in December 2021, Pfizer shares have lost around half their value amid slumping demand for Covid-19 vaccines and treatments, with challenges compounded by setbacks in the highly lucrative obesity drug market and a recent global recall of its sickle cell disease medicine due to several adverse side effects.

Pfizer shares were up 0.1% at $29.24 in premarket trading Tuesday about two hours before the opening bell, after gaining more than 2% yesterday.

Below, we take a closer look at the technicals on Pfizer’s chart and point out key price levels worth watching out for.

Cup and Handle Pattern Signals Potential Bottom

Pfizer shares have formed a cup and handle, a chart pattern that resembles a cup and handle where the cup is in the shape of a “u” and the handle has a slight downward drift. 

Although the formation can indicate a continuation of an uptrend, it can also signal a potential bullish reversal, as is the case on the Pfizer chart. In addition, the 50-day moving average (MA) crossed above the 200-day MA in July to form a golden cross, a chart indicator also pointing to higher prices.

More recently, the stock has traded mostly sideways since breaking out from the pattern’s handle last month, though Monday’s volume-backed close above the 50-day MA may act as a catalyst for further upward momentum.

Higher Chart Levels to Watch

Amid further upside, investors should initially watch the $31.75 level, where the stock may encounter resistance from a trendline that connects multiple peaks and troughs on the chart and forms the cup and handle’s neckline.

A breakout above this level would confirm the pattern, which could fuel a move up to around $34.75, where the shares may face selling pressure near the August 2023 swing low.

Further buying may see the stock climb to the $37 region, a location on the chart where investors may look to place sell orders near a range of similar trading levels between May and August last year.

A longer-term bullish move could lead to a retest of $39.75, where the shares may meet overhead resistance near a period of March 2023 consolidation, an area that also closely aligns with last year’s May and June peaks.

This area also matches an upside price target projected by the measuring principle, which calculates the distance of the cup and handle’s cup in points and adds that amount to the pattern’s neckline. ($8 + $31.75 = $39.75).

Key Support Area to Monitor

If the shares fail to hold current levels, investors should keep an eye on how the price responds to the $28.25 area. A decisive breakdown below the recent sideways range could see a continuation of the stock’s longer-term downtrend.

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