Sherwin-Williams' share price levels are worth keeping an eye on following news of its inclusion in the Dow

Shares of paint maker Sherwin-Williams (SHW) are likely to remain in focus after jumping in extended trading on Friday following news that the company will be added to the Dow Jones Industrial Average.

Sherwin-Williams will replace chemical giant Dow Inc. (DOW) in the price-weighted index tracking 30 major companies. S&P Dow Jones Indices also said AI investor favorite Nvidia (NVDA) will replace struggling chipmaker Intel (INTC), with the changes taking effect before trading begins on Friday.

Sherwin-Williams shares have gained about 15% year-to-date (as of Friday), surpassing the DJIA's return of about 12% over the same period. Although the company missed earnings estimates last quarter, it has beaten Wall Street expectations in most of the past 20 quarters, underscoring the paint maker's long-term profitability, according to FactSet data.

The stock rose 3.4% to $370 in after-hours trading on Friday.

Below, we review the technical data on Sherwin-Williams' weekly chart and identify key price levels that investors may be keeping an eye on.

Possible retest of cup and handle pattern

Since peaking in late 2021, Sherwin-Williams shares have carved out a cup and handle pattern, a bullish chart pattern that resembles a cup with a handle, signaling a continuation of the stock's longer-term upward trend.

In fact, stocks broke out above the formation in mid-August, but have recently fallen back toward the original breakout point, potentially leading to a retest of the pattern's upper trendline.

Let's use technical analysis to identify two key support levels on the Sherwin-Williams chart and forecast a measured price target.

Key support levels to keep an eye on

The first support level that comes to mind is around $348, where shares could see buying interest near the upper trendline of the cup and handle, potentially tipped from an area of ​​previous resistance into future support.

If bulls fail to defend this key technical level, the stock could face a return to lower support at $283, which is currently just above the closely watched 200-week moving average.

Investors in this area could look for entry points near a trendline that connects a series of comparable price movements on the chart between May 2021 and June this year.

Measured movement price target

To predict a bullish price target, we can use the measured movement technique, also known as the measurement principle among chart watchers.

This works by calculating the depth of the cup-shaped portion of the pattern and adding that amount to the upper trendline of the formation. For example, we add $155 to $348, which predicts a measured move target of $503, an area where investors could take profits, especially given its proximity to a psychological round number.

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At the time of writing, the author does not own any of the securities mentioned above.