Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • Uber shares lost ground Monday but are still near record highs after investors saw little threat to rideshare companies from Tesla’s highly anticipated robotaxi unveiling last week.
  • A chart-based price target using the measuring principle projects a potential move up to $93, an area where investors may decide to lock in profits.
  • Investors should watch important support levels on Uber’s chart around $81, $74, and $68.

Shares in Uber Technologies (UBER) lost ground Monday but were still near record highs after investors saw little threat to rideshare companies from Tesla’s (TSLA) highly anticipated robotaxi unveiling last week.

Tesla revealed its long-awaited Cybercab autonomous vehicle and a larger Robovan at an event last Thursday evening. Analysts pointed out that the electric vehicle maker provided little in the way of details, with no specific business model to indicate how the new lineup of autonomous vehicles would eventually compete with companies such as Uber and Lyft (LYFT).

Since the start of the year, Uber shares have climbed nearly 40%, in part from its own foray into robotaxis. In recent months, the company has announced partnerships with General Motors’ (GM) self-driving car company Cruise, Alphabet’s (GOOGL) autonomous vehicle business Waymo, and startup Wayve.

Uber stock was down 1.6% at $85 in mid-afternoon trading Monday. The stock hit an all-time high of $87 on Friday and finished the session 11% higher.

Below, we take a look at the technicals on Uber’s chart and identify important price levels worth watching out for.

Inverse Head and Shoulders

Uber shares carved out an inverse head and shoulders pattern on the chart between May and September, with the stock’s price decisively breaking out above the pattern on Friday. 

Importantly, the move occurred on the highest trading volume since early May, signaling buying activity by larger market participants. 

Moreover, the relative strength index (RSI) confirms bullish price momentum with a reading above 70, but also cautions overbought conditions that open the door to short-term profit taking.

Let’s take a look at a chart-based upside price target and locate three important support levels likely to attract attention.

Chart-Based Price Target to Monitor

We can project a price target using the measuring principle, helping us determine an area on the chart where investors may decide to lock in profits.

To do this, we calculate the distance from the inverse head and shoulders head to neckline and add that amount to the breakout point.

For instance, we add $19 to $74, which forecasts a bullish target of $93, representing upside of around 8% from Friday’s close.

Watch These Important Support Levels

During an initial pullback, investors should keep a close eye on the $81 level, where the shares could garner support near three prior peaks that formed on the chart from February to March, an area that also closely aligns with the low price of Friday’s breakaway gap.

A failure to hold this level could see the stock decline to around $74, a location on the chart where investors who prefer not to chase breakouts may look for buying opportunities near the inverse head and shoulders pattern’s neckline.

Finally, further selling could lead a decline to the $68 area, were the shares may encounter support around a horizontal line connecting a range of comparable trading levels on the chart between May and September.

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