Key CVS Health Stock Price Levels to Watch

Key Takeaways

• CVS Health shares have been in the spotlight following reports that the healthcare services giant is considering separating its retail pharmacy and insurance units as it looks to improve profitability and appease investors. 
• The stock remains stuck in a long-term descending channel, with the price trading sideways since finding buying interest near the pattern’s lower trendline in late April.
• Investors should watch crucial support levels on CVS Health’s chart around $56 and $52, while monitoring key resistance areas near $68 and $76.

CVS Health (CVS) shares have been in the spotlight following reports that the healthcare services giant is considering separating its retail pharmacy and insurance units as it looks to improve profitability and appease investors.

The company also said this week it will lay off about 2,900 employees, representing about 1% of its workforce, as part of a previously announced cost-cutting plan. These latest developments come after CVS executives reportedly met hedge fund investor Glenview Capital Management on Monday to discuss a shakeup of the the firm’s operations.

Shares in the healthcare conglomerate rose 1.1% Wednesday to close at $62.24 but have fallen 21% since the start of the year, weighed down by higher expenses, lower reimbursements and shifting consumer habits, all of which have contributed to the company lowering its outlook in recent quarters.

Below, we take a closer closer look at CVS Health’s weekly chart and turn to technical analysis to identify important longer-term price levels to watch out for.

Shares Stuck in Descending Channel

CVS Health shares have traded within a descending channel since late 2021, with the price tagging the pattern’s upper and lower trendlines several times to establish easily identifiable support and resistance areas on the chart.

More recently, buyers stepped up to defend the channel’s lower trendline after a steep sell-off throughout April, though the stock has chopped in a sideways drift since.

The relative strength index (RSI) gives a reading of around 50, indicating neutral conditions, while declining volumes since the stock bottomed in late April points to waning interest from larger market participants, such as institutional investors and pension funds.

Let’s take a look at several longer-term price levels that investors will likely be watching.

Crucial Support Levels in Play

The first level to watch sits around $56, a region where the stock may find buying interest near the lower portion of the recent rangebound period. This area also aligns with similar trading levels on the chart between March 2019 and November 2020.

Selling below this level could see the shares decline to the $52 area, where they would likely encounter support around the April and May 2019 troughs.

Key Resistance Levels in Focus

An initial move higher could bring the $68 level into play, an area on the chart where the stock may face a wall of resistance from the descending channel’s upper trendline and multiple peaks and troughs on the chart stretching from October 2017 to December last year.

A breakout above this level could accelerate a move up to $76, an area where investors may look to lock in profits near a multi-year trendline connecting a range of similar price levels from early 2017 through to March this year.

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