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Key Takeaways
- After a bumper start to the year riding Wall Street’s AI wave, AMD shares have slumped as investors question the company’s ability to capture a greater share of the booming AI chip market from tech behemoth Nvidia.
- AMD shares have recently consolidated within a symmetrical triangle, a chart pattern that typically precedes a trending move in the direction of the breakout or breakdown.
- A breakout in AMD shares may see the price initially climb to $184 before potentially retesting their record high at $227.30.
- A breakdown could see the shares find buying interest from a zone of support between $132 and $116.
After a bumper start to the year riding Wall Street’s artificial intelligence (AI) wave, shares in chipmaker AMD (AMD) have slumped as investors question the company’s ability to capture a greater share of the booming AI chip market from tech behemoth Nvidia (NVDA).
AMD shares gained 4.2% on Tuesday to close at $164.31, but they’re down 28% from their March high.
Below, we take a closer look at the AMD chart using technical analysis and point out key chart levels to watch out for.
Longer-term, AMD shares have trended mostly higher since the 50-day moving average (MA) crossed above the 200-day MA in March last year to generate a bullish golden cross buy signal. However, the stock fell out of favor with investors between March and early May this year, slumping as much as 38% over that period from its record high.
Consolidation Within Symmetrical TriangleÂ
More recently, the shares have consolidated within a symmetrical triangle, a chart pattern characterized by two converging trend lines with opposite slopes. Typically, a breakout from this formation marks the start of a new bullish trend, while a breakdown signals the start of a bearish trend, especially if the move occurs on higher-than-average trading volume.
Given the price trades above both the 50- and 200-day moving averages towards the symmetrical triangle’s upper trendline, investors should monitor for a near-term breakout, but also have levels in mind if the stock breaks to the downside.
Monitor These Key Levels Amid Breakout From Pattern
Upon a breakout above the pattern, the price could see an initial move to $184, an area on the chart where it may encounter overhead resistance from a horizontal line connecting a range of prices between January and April. A close above this level could give bulls the confidence to retest the stock’s all-time high (ATH) set in early March at $227.30.
If the AMD shares stage a breakdown from the symmetrical triangle, it’s worth monitoring an area on the chart between $132 and $116, a location where the stock would likely attract buying interest from a zone of support from various peaks and troughs formed between May and December last year.
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