UnitedHealth Group Has Broken Out to New Highs

 | Jun 13, 2018 | 12:03 PM EDT
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UnitedHealth Group Inc. (UNH) has broken out above its January highs. What sort of upside potential do we see in the charts and indicators? We do not need an annual checkup now but a spot check of the charts and indicators should be good enough right now.

UNH was reviewed in late April, and I said that, "UNH may or may not pull back closer to $230 which would fill the recent gap. While some like to try to buy low and sell high, I, on the other hand, like to buy high and sell higher. I would suggest that traders go long above $240 looking for gains to $264 risking below $230."

(UnitedHealth is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells UNH? Learn more now.)

In this daily bar chart of UNH, below, we can see that UNH did fill the price gap. The $230 level was tested a couple more times before UNH started to rally in May and traders should have/could have gone long above $240.

UNH is trading above the rising 50-day and the bullish 200-day moving averages.

The daily On-Balance-Volume (OBV) line has been neutral the past five months but is close to making a new high for the move up. A rising OBV line is a sign that buyers of UNH have been more aggressive than sellers.

The Moving Average Convergence Divergence (MACD) oscillator is pointed higher in a bullish mode.

In this weekly bar chart of UNH, below, we can see the chart and the indicators all in a bullish alignment. Prices are above the rising 40-week moving average line. The 40-week average has done an excellent job in keeping investors on the right side of the rally for the past two-and-a-half years.

The weekly OBV line has been positive for most of the past three years and is currently in new high ground to confirm the price advance.

The weekly MACD oscillator crossed to a fresh outright go long signal at the end of April.

In this Point and Figure chart of UNH, below, we can see a breakout at $250.70 and a potential upside price target of $287.50.

Bottom line: UNH is moving higher and you can either join the advance or get out of the way. We have a price target of $287. Traders could risk below $240 and investors below $230.

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