On Sunday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Monday. From the replies, Benzinga selected one ticker for technical analysis.
@Usman_A_Khan, @TEDDYBRUCKKSHOT and @Lford123 are buying Advanced Micro Devices (NASDAQ:AMD).
Advanced Micro Devices was falling over 1% in the premarket on Monday, in sympathy with the SPDR S&P 500, which was trading about 0.8% lower. The decline dropped AMD under an important psychological support level at $100, and bullish traders will want to see the stock regain the level in short order to avoid the area becoming heavy resistance.
On Friday, Truist Securities maintained a Hold rating on AMD, but lowered its price target to $111. The Truist Securities price target comes in lower than that of Deutsche Bank and KeyBanc. Duetsche Bank maintained a Hold rating on the stock and lowered the price target from $140 to $125, while KeyBanc maintained its Overweight rating and a price target of $165.
The price targets represent an increase of between about 11% and 65% from AMD’s current prices.
In order to reach any of the targets, AMD will need to make a reversal to the upside, which is likely to happen if the stock is able to break up over a descending trendline that has been holding the stock down since Dec. 27.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
Also Read: AMD Vs. NVDA Vs. INTC: How Cloud Processor Demand Stacked Up In March
The AMD Chart: On March 21, AMD broke up from the descending trendline but there wasn’t enough bullish momentum and on April 6, the stock fell back below the trendline, which created a bull trap. On April 6 and April 7, AMD attempted to break up bullishly from the pattern again, but failed and wicked from the area.
The recent bearish price action has caused the 50-day simple moving average (SMA) to cross below the 200-day SMA, which caused a death cross to appear on AMD’s chart. Although the death cross is a lagging indicator, it implies more downside could be in the cards.
AMD is trading in a confirmed downtrend, with the most recent lower high printed on April 4 at $110.94 and the most recent lower low formed on April 1 and $106.10. Eventually, AMD will bounce up to print another lower high, which may provide bearish traders who aren’t already in a position a solid entry.
There is a gap on AMD’s chart between $116.31 and $118.59. Gaps on charts fill about 90% of the time, which makes it likely that the stock will rise up to fill the empty range at some point in the future, but it should be noted it could be a long period of time before that happens.
AMD is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The eight-day EMA may continue to guide the stock lower, unless AMD is unable to break up from the descending trendline.
- Bulls want to see big bullish volume in to defend the $100 level as support and then for continuation to break the stock up from the descending trendline, which could indicate a massive reversal is in the cards. AMD has resistance above at $106.99 and $112.61.
- Bears want to see big bearish volume come in and hold AMD below the $100 level, and for the descending trendline to continue to guide the stock lower in its downtrend. AMD has support below at $92.75 and $87.45.
