Yahoo Finance

Key Takeaways

• UnitedHealth Group shares slid in recent trading Thursday after tumbling Wednesday amid worries about potential cuts to Medicaid and Medicare, and a report accusing the company of paying secret bonuses to nursing homes, adding to pressures facing the embattled health insurance giant.

• The shares rallied earlier this week but have since pared most of their gains to form a gravestone doji, a candlestick pattern that indicates a potential bullish reversal after the stock's steep sell-off.

• Investors should watch key support levels on UnitedHealth's chart around $292 and $249, while also monitoring resistance levels near $325 and $365.

UnitedHealth Group (UNH) shares slid in recent trading Thursday after tumbling Wednesday amid worries about potential cuts to Medicaid and Medicare, and a report accusing the company of paying secret bonuses to nursing homes.

Adding to pressures facing the embattled health insurance giant and others in the sector, the Centers for Medicare & Medicaid Services said it plans a "significant expansion" of its auditing efforts for Medicare Advantage plans.

Since reaching their April high, UnitedHealth shares have lost about half their value, weighed down by multiple challenges—including a Justice Department investigation of the heath insurer for Medicare fraud, its CEO’s abrupt departure, and the company's withdrawal of its full-year guidance.

Below, we take a closer look at UnitedHealth’s weekly chart and use technical analysis to identify key price levels after the stock’s recent volatility.

Gravestone Doji Emerges

Since UnitedHealth’s countertrend rally ended in early April, the stock moved lower for five consecutive weeks, coinciding with the relative strength It’s index (RSI) sliding into oversold territory.

The stock rallied earlier this week, but has since pared most of those gains to form a gravestone doji. While chart watchers typically associate it as a bearish candlestick pattern, a gravestone doji can also indicate a bullish reversal, especially if it emerges after an extended downtrend, such as on UnitedHealth’s chart.

It’s worth pointing out that trading volume has surged over the past two weeks, potentially signaling capitulation selling, an event that can mark the end of a steep decline.

Below, we identify several key support and resistance levels on UnitedHealth’s chart that could be worth watching.

Key Support Levels to Watch

First, it’s worth watching the $292 level. The shares could find support in this area near last week’s close, which also closely aligns with a range or corresponding price action on the chart between late 2019 and mid-2020.