Important points
Shares of Advanced Micro Devices fell sharply on Thursday after the chipmaker’s new AI lineup failed to excite investors who had been waiting to see the company take on Nvidia. Thursday’s decline occurred at the all-time high, with the stock experiencing selling pressure near the upper trendline of the descending channel. Investors should keep an eye on the key downside levels near $162, $142, and $122 on the AMD chart, as well as the $220 upside target predicted using measurement principles.
Advanced Micro Devices (AMD) stock fell 4% on Thursday after the chipmaker’s new AI lineup failed to excite investors who had hoped the company would compete with Nvidia (NVDA).
AMD’s next-generation products, announced at today’s Advancing AI event, arrive as demand for AI chips soars and AMD looks to expand its market share. Analysts said investors may have been looking for a clear sign of competition from AI investor darling Nvidia, an boost to the outlook or an announcement of a new customer.
AMD stock was up 11% year-to-date (year-to-date) through Thursday’s close, about half the return of the S&P 500 over the same period. Shares have been lagging on concerns that the company is failing to capitalize on the lucrative AI infrastructure boom.
Below, we analyze the technicals of AMD’s chart and identify key price levels that investors should be aware of.
descending channel resistance
Since a bearish engulfing pattern marked AMD’s all-time high (ATH) in early March, the chipmaker’s stock price has fluctuated in an orderly descending channel, with chart patterns showing lower highs and lower lows. It consists of parallel downward trend lines.
Recently, the stock has been under selling pressure near the upper trendline of the channel, and Thursday’s decline occurred on the heaviest volume since the early August decline, suggesting there is conviction behind the decline. It shows.
It’s also worth noting that while the stock continues to stay above its 200-day moving average (MA), the indicator formed a death cross above its 50-day moving average in August, a chart signal that predicts a low price. .
Let’s take a look at the three main downside levels that could impact the chipmaker’s stock price if it continues its retracement. Also, use charts to predict upside targets.
Key Chart Lower Levels to Watch
The first area to look at is around $162, which is not far below Thursday’s closing price of $164.18. This is where the stock could gather buying interest near the 200-day moving average and the trend line connecting the range of similar trading levels on the chart from February to October.
If the bulls are unable to sustain this level, the stock could fall to the $142 region, where support could be found in the horizontal line connecting last December’s consolidation period and the notable May bottom. be.
A deeper correction could see the stock revisit the lower support around $122, a position on the chart where investors can look for buying opportunities near the lower trendline of this channel, which could lead to a 2023 The low in early August and the peak in late November are roughly in line.
Upside targets to monitor
To predict the upside price target above the descending channel, you can use the measurement principle.
This charting technique works by calculating the distance between the two trendlines of the pattern and projecting that distance from the top trendline of the channel.
In other words, we add $50 to the stock to make it $170, with an expected upside target of $220, just below the stock’s all-time high of $227.30.
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As of the date this article was written, the author did not own any of the securities mentioned above.
