The Santa Clara-based American multinational semiconductor company, Advanced Micro Devices, Inc. (NASDAQ: AMD) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Uptrend Channel: The daily chart of AMD shows that the stock has been trading within an uptrend channel for the past few months. This channel is marked in the daily chart in purple color. Currently, the stock has taken support at the lower rail of the channel and has started it’s upwards move. This is a possible bullish sign.
Daily Chart – AMD
#2 Oversold Stochastics: The stochastics oscillator shows that it is currently near oversold levels and moving up. The %K (blue) line has also crossed above the %D (orange) line. This indicates a possible reversal from the current short-term downtrend.
[hana-code-insert name=’adsense-article’ /] #3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.#4 Oversold RSI: The RSI is currently moving up after reaching oversold levels.
This indicates that the stock may reverse to upside soon.
#5 Bullish CCI: The CCI is currently moving up after reaching oversold levels.
This points to a possible reversal of the current short-term downtrend.
#6 Fibonacci Level Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. AMD had taken support at the 61.8% Fibonacci support level of the upmove, as seen from the weekly chart. This seems like a good level to bounce back upwards. The price is also above the 50-week and 200-week SMA, indicating that the bulls are now in control.
Weekly Chart – AMD
#7 MACD above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates bullishness.
#9 Reversal Candle: The latest candle in the weekly chart is a Doji, which is a bullish reversal candle. This means that the stock could move higher in the near-term.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of AMD at the current price of $26.34.
TP: Our target prices are $33 and $40 in the next 4-6 months.
SL: To limit risk, place a stop loss at $23.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 25% to 52% in the next 4-6 months.
For a risk of $2.84, our target rewards are $6.66 and $13.66. This is an almost 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the lower rail of the uptrend channel. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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