Watch These Arm Stock Price Levels as Selloff Accelerates After Downgrade

Shares in chip design giant Arm Holdings (ARM), which reports quarterly results after Wednesday’s close, tumbled more than 5% on Monday after receiving a downgrade from HSBC, accelerating their retreat from a record high earlier this month.

The investment bank said it sees short-term downside earnings risk given a potential slowdown in Android smartphone momentum and an easing artificial intelligence (AI) narrative, two key markets for UK-based Arm. It also raised valuation concerns, noting that the company’s stock trades at a significant premium relative to its large-cap semiconductor peers after increasing more than twofold over the past 12 months through Monday’s close.

Arm shares fell 5.1% during Monday’s regular session, and lost another 0.8% to $140.25 in after-hours trading.

Below, we take a closer look at the technicals on Arm’s chart and identify important price levels to watch out for.

Retracement on Light Trading Volume Continues

After bottoming out about five weeks after going public in September last year, Arm shares have trended mostly higher.

More recently, the stock has retraced about 24% from its record close earlier this month, though the move has occurred on relatively light trading volume, indicating the shares may be undergoing a pullback rather than a longer-term reversal.

Monitor These Key Support Areas Amid Weakness

Amid further weakness in Arm shares, investors should watch three key levels where the price may attract buying interest.

The first sits around $145. Although the shares closed below this level on Monday, it’s worth watching if the bulls can reclaim this area and the 50-day moving average in upcoming trading sessions, a move that would indicate a potential bear trap, especially if the stock holds above a crucial uptrend line extending back to the late October low.

However, a decisive breakdown below the above level could see a decline to $117, a region on the chart where the price may encounter support from a horizontal line connecting a series of comparable trading levels between February and May.

A deeper correction opens the door for a possible retest of lower support around $79, where the shares would likely attract bargain hunters seeking entry points near two prominent price peaks that formed just prior to the stock’s breakaway gap in early February.

When monitoring these levels, also keep an eye on the relative strength index (RSI). An oversold reading at the same time increases the chances that the stock may be ready for a bounce or to continue its uptrend.

Watch This Key Level if Uptrend Resumes

If Arm shares resume their move higher, investors can forecast a potential upside target by using a bars pattern. To do this, we transport the bars comprising the stock’s trending move between late April and early July to Monday’s low, which projects a price target of around $275.

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