Key Takeaways
- Super Micro Computer shares are likely to remain in the spotlight this week after gaining more than 4% on Friday and ahead of a stock split that takes effect next week.
- Since setting their record high in early March, Super Micro Computer shares have oscillated within a descending broadening formation, with buyers recently defending the pattern’s lower trendline.
- Investors should monitor key lower price levels on Super Micro Computer’s chart around $357 and $230, while watching important higher price levels near $700 and $975.
Super Micro Computer (SMCI) shares are likely to remain in focus this week after gaining more than 4% on Friday and ahead of the a stock split that takes effect next week.
The stock is looking to build on momentum after losing around half its value over the past three months, in part due to disappointing fiscal fourth quarter results and accusations of “accounting manipulation” by short seller Hindenburg Research. The company’s shares, which undergo a 10-for-1 stock split after the closing bell on Sept. 30, are still up about 60% since the start of the year amid expectations for booming artificial intelligence (AI) server demand to house chips that power the technology.
Looking ahead, the company also stands to benefit from being a first mover in liquid cooling rack systems, according to the analysts at Needham, prompting the investment firm to initiate coverage of the stock last week with a “buy” rating and $600 price target, representing 31% upside from Friday’s close of $457.27.
Below, we take a closer look a Super Micro’s chart and turn to technical analysis to identify crucial price levels to watch out for.
Shares Trade Within Descending Broadening Wedge
Since setting their record high in early March, Super Micro Computer shares have oscillated within a descending broadening formation, with the stock’s price tagging both trendlines on several occasions over the past six months to establish key support and resistance levels.
Although the 50-day moving average (MA) crossed below the 200-day MA to form an ominous death cross earlier this month, buyers have recently defended the wedge’s lower trendline.
What’s more, Friday’s rally occurred on the highest trading volume in nearly two weeks, potentially setting the stage for further bullish price momentum.
Looking ahead, investors should keep an eye on several important lower and higher price levels that stand out on Super Micro Computer’s chart.
Key Lower Chart Levels to Watch
Firstly, it’s worth monitoring the $357 level. This area on the chart finds a confluence of support from a horizontal line joining the early August 2023 and January 2024 peaks with the broadening wedge’s lower trendline.
A failure to hold this level could see the shares revisit lower support around $230, a location where investors may look for buying opportunities near three troughs that formed on the chart between August and October last year.
Important Higher Chart Levels to Watch
Upon a move higher, investors should monitor the $700 level, a region currently aligning with the 200-day MA where the shares may run into selling pressure near a trendline connecting a range of price action between February and early August.
A breakout above this level and the wedge’s upper trendline could fuel a rally to $975, an area where sellers may look to offload shares near the mid-April countertrend peak and three swing highs that formed on the chart in May, June, and July.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.