Watch These UPS Stock Price Levels Following Earnings-Driven Plunge

United Parcel Service (UPS) shares dropped 12% on Tuesday, hitting a four-year low, after the shipping giant posted a steep decline in second-quarter profit and trimmed its outlook, as package deliveries normalize from pandemic-era highs.

Amid the earnings-driven sell-off, we turn to technical analysis to identify important price levels on the UPS weekly chart to watch out for.

Breakdown From Descending Triangle

Since the 50-week moving average (MA) crossed below the 200-day MA to form an ominous death cross signal in December last year, UPS shares have traded within a textbook descending triangle. The pattern, which indicates a continuation of the stock’s current downtrend, comprises one trend line connecting a series of lower highs and a second horizontal trendline connecting a series of lows. 

Indeed, the delivery giant’s share price has staged a decisive breakdown from the pattern this week on above average trading volume following Tuesday’s earnings-driven drop, suggesting strong selling momentum behind the move.

Monitor These Levels Amid Follow-Through Selling

If follow-through selling continues, investors should monitor three important chart levels where the shares may encounter support.

Firstly, it’s worth keeping an eye on the $125 area, a high probability long-term support level near a horizontal line linking two prominent swing highs that formed between September 2018 and November 2019.

A failure to hold the above area could see the shares retrace to around $103, where investors may look for buying opportunities close to a trendline connecting several peaks and troughs from March 2018 to April 2020.

Finally, a more significant decline may see the stock revisit $93, a location on the chart that encounters support from three swing lows that played out between December 2018 and May 2020.

Interestingly, a bars pattern that extracts the impulsive downtrend that precedes the descending triangle and positions it from the pattern’s lower trendline predicts a downside price target of around $100, sitting within the range of the lower two support levels pointed out above.

UPS shares were down 0.3% at $127.32 in premarket trading Wednesday about two hours before the opening bell. The stock closed Tuesday at its lowest level since July 2020.

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