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Key Takeaways
- Shares in Arm Holdings will likely remain in focus on Tuesday after the stock surged yesterday following a report that the iPhone 16 will run on a chip based on the British company’s design.
- Although the stock has found buying interest this month around the 200-day moving average, it remains susceptible to further selling while trading under the closely-watched 50-day moving average.
- Investors should monitor key support levels on Arm’s chart at $94 and $78, while watching important resistance levels at $135 and $149.
Shares in Arm Holdings (ARM) will likely remain in focus on Tuesday after jumping 7% yesterday following a report in the Financial Times that said Apple’s (AAPL) new artificial intelligence-powered iPhone 16 will run on a chip based on the British company’s next generation Armv9 CPU.
Arm, which makes money by earning royalties on its chip designs, has seen its shares languish since setting a record high in July after issuing disappointing current quarter and full-year earnings outlooks.
Below, we’ll take a closer look at Arm’s chart and use technical analysis to point out important price levels investors need to watch out for. The stock was up 1.2% at $127.00 in recent premarket trading.
Stock Vulnerable Below 50-Day Moving Average
After suffering through a correction of nearly 50%, Arm shares bottomed out in early August below the 200-day moving average (MA) before rallying up to a multi-month uptrend line that has now flipped from support into resistance.
Although the stock has again found buying interest in early September around the 200-day MA, it remains susceptible to further selling while trading under the closely-watched 50-day MA.
Amid the possibility for further price swings in either direction, investors should keep an eye on these key support and resistance levels on the Arm chart.
Support Levels to Watch
Firstly, it’s worth watching the $94 level. This area on the chart could draw buying interest near the low of the Feb. 8 earnings-driven breakaway gap, which also roughly aligns with several comparable trading levels around the late April retracement.
A breakdown below this level could see the shares tumble to $78, where they would likely encounter support near the December and January peaks, both of which marked prior record highs in the stock.
Interestingly, this region also sits near a projected bars pattern price target when extracting the impulsive move lower from July to August and repositioning it from last month’s high. Such a move would form a head and shoulders-like top, a chart pattern that signals a major market top.
Resistance Levels to Monitor
Further upside could propel a move up to the $135 level, a chart location where the stock may run into resistance near a horizontal line connecting a range of price peaks between February and August.
A rally above this level may see the shares climb to $149, where sellers could look to lock in profits near the Feb. 12 wide-ranging day’s close, which lies close to several peaks and troughs from February to June and the multi-month uptrend line.
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As of the date this article was written, the author does not own any of the above securities.