Key Takeaways
- Novo Nordisk’s U.S.-listed shares were slightly higher in recent trading after shedding a third of their value last week, when the company cut its full-year outlook and named a new CEO.
- The shares had resumed their steep downtrend last week on above-average volume, indicating selling conviction from larger market participants.
- Investors should watch major support levels on Novo Nordisk’s chart around $36 and $29, while also monitoring key overhead areas near $60 and $78.
Novo Nordisk’s (NVO) U.S.-listed shares were up about 2% in recent trading after shedding about a third of their value last week, when the company cut its full-year outlook and named a new CEO, leading Wall Street analysts to downgrade the stock.
Since hitting a record high in June last year, Novo Nordisk shares have lost roughly two-thirds of their value, pressured by increasing competition from rival Eli Lilly’s (LLY) weight-loss drugs and challenges during trials of the company’s next-generation obesity drugs.
Below, we take a closer look at Novo Nordisk’s weekly chart and use technical analysis to identify major price levels that investors will likely be watching after last week’s dramatic sell-off.
An Extended Downtrend
With last week’s drop, Novo Nordisk shares resumed their steep downtrend on above-average trading volume, indicating selling conviction from larger market participants.
The sell-off coincided with the relative strength index (RSI) falling to its lowest levels since early May, signaling weakening price momentum, though the indicator neared its oversold threshold, increasing the chances for short-term bounces.
It’s also worth noting that the 50-week moving average continues to converge toward the 200-week MA, potentially setting the stage for an ominous death cross, a bearish pattern that forecasts lower prices.
Let’s identify two major support levels on Novo Nordisk’s chart worth watching if selling resumes this week and also point out several key overhead areas to monitor during potential recovery efforts.
Major Support Levels Worth Watching
The first major lower level to watch sits around $36. This area would likely provide support near the upper range of a consolidation period that formed on the chart between October 2020 and April 2021.
A more significant move lower could see the shares test lower support at the $29 level. Investors may look for buying opportunities in this area near a horizontal line that connects a range of corresponding price action on the chart between January 2018 and April 2020.
Key Overhead Areas to Monitor
An initial recovery effort could see the shares climb to overhead resistance around $60. The price may encounter selling pressure in this area near the prominent April trough and April 2022 peak.
A more bullish upswing opens the door for a rally toward $78. Investors who have bought Novo Nordisk shares at lower levels may decide to lock in profits in this location near the June peak, which closely aligns with the completion of a pullback in July 2023.
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As of the date this article was written, the author does not own any of the above securities.
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