UPS shares have been moving sideways in the past few weeks but could be due for a strong bounce sooner or later. Price is currently finding support at the 50 simple moving average on its daily chart and this indicator has acted as a dynamic inflection point in the past.
A bounce off the current levels could lead to a test of the previous highs at the $112/share level. Stronger buying pressure could result to an upside break and possibly a move until $115/share, which appears to be the next resistance zone.
UPS Shares Forecast
A downside break from the simple moving average could mean more losses for UPS shares, which might edge to the next support around $108/share or lower. The 200 simple moving average might also hold as support around the $101/share level.
MACD is still moving down, indicating that there’s enough selling pressure left to trigger a break lower. RSI, on the other hand, has just crossed up from the oversold area and is headed north, which suggests that buying momentum might keep picking up.
Much of the consolidation in UPS shares recently has been brought about by market uncertainty, as investors speculate on what the Fed’s monetary policy bias might be and how potential changes might affect US companies in the coming months. For now, low inflation is keeping the Fed cautious and unlikely to make any tightening moves early in the year.
However, hiring gains have been consistent and are likely to result to stronger consumer spending, especially since the fall in energy prices have allowed consumers to spend more of their disposable income on other items. This could lead to stronger growth prospects, which might prompt the Fed to hike interest rates around the second half of the year and lead to tighter credit conditions.
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