Johnson & Johnson (JNJ) shares tumbled Tuesday after the health care giant failed to reach a settlement in liability cases related to its baby powder and other talc products.

The company said Tuesday that a judge denied its plan to settle thousands of legal claims alleging that its talc products cause ovarian cancer, adding that it will now return to the tort system to litigate and defeat the claims. The failed proposal involved using a “prepackaged bankruptcy plan” for a subsidiary, marking the third attempt the company has used the bankruptcy system in an effort to settle the claims.

Johnson & Johnson shares led S&P 500 decliners on Tuesday, falling 7.6% to close at $153.25. Despite today’s steep drop, Johnson & Johnson shares have gained 6% so far this year as of Tuesday’s close, handily outpacing the S&P 500’s 4% decline over the same period.

Below, we take a closer look at Johnson & Johnson’s weekly chart and use technical analysis to point out key price levels that investors may be watching.

Descending Channel in Focus

Since setting their record high in April 2022, Johnson & Johnson shares have traded lower within an orderly descending channel, tagging the pattern’s upper and lower trendlines on several occasions since that time.

More recently, the Dow component ran into selling pressure near the descending channel’s upper trendline, with the price falling below both the 50- and 200-week moving averages in Tuesday’s trading session.

Today’s drop also coincided with the relative strength index (RSI) plunging below the 50 threshold, signaling accelerating selling momentum.

Let’s identify key support and resistance levels on Johnson & Johnson’s chart worth watching.

Key Support Levels to Watch

Firstly, it’s worth keeping track of the $147 level. This area will likely provide support near a trendline that connects multiple peaks and troughs on the chart stretching between January 2018 and June last year.

Further selling could see a breakdown below the descending channel’s lower trendline and subsequent fall to around $137. Investors may be on the lookout for entry points in this region near a trendline that links the June 2017 peak with a range of comparable price action on the chart through to October 2020.

Major Resistance Levels to Monitor

Upswings in Johnson & Johnson shares could initially meet overhead resistance near the $167 level, currently just above the descending channel’s upper trendline. The stock may encounter selling pressure in this location near the March and September peaks, with the area also roughly aligning with trading activity extending back to February 2021.

Finally, a breakout above this level could see the shares climb to around $180. Investors may look for profit-taking opportunities here near the prominent August 2021 and December 2022 peaks, which both sit slightly below the stock’s record high.

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As of the date this article was written, the author does not own any of the above securities.