AMD Analysis: Navigating Historical Trends 2025.01.01Hello, this is Greedy All-Day.
Today’s analysis focuses on AMD (Advanced Micro Devices).
Weekly Chart Analysis
Looking at AMD's weekly chart, the stock has followed a historical long-term trendline since the 1970s. Over the years, there have been four major trendline breaks, each followed by substantial corrections:
87%, 75%, 93%, and 54% corrections from the trendline break points, with an average correction of approximately 77%.
Importantly, these corrections are measured from the trendline break, not the stock's all-time high.
Recently, AMD has broken below its long-term trendline again.
This suggests we should be prepared for the possibility of a 77% correction from this point.
Where Would a 77% Correction Lead?
A 77% correction from the trendline break would bring AMD to approximately $35.
The $35 Zone: Why It’s Significant
The $35 level is particularly noteworthy because:
It aligns with the green box zone, which acted as a resistance area before AMD’s breakout to all-time highs in 2018–2019.
It coincides with a retest zone in the white box, where historical support was tested.
It also matches historical resistance dating back to the 2000s, making it a logical retest zone.
If AMD were to rebound, $35 would be a strong candidate for a turnaround point.
Bearish Indicators
Several factors point to a continued bearish trend:
AMD appears to have completed a symmetrical triangle pattern with a downside breakout.
It has broken below the August 5, 2024 weekly low, a key support level.
The only remaining support is at $116.37, marked by the green box.
If $116.37 breaks, and the pattern turns out to be a descending triangle, the target could exceed 85%, reaching levels even lower than $35.
Currently, AMD is trading within the white box supply zone.
A break below $116.37 opens the door to $93, the lower boundary of the white box.
However, if AMD moves like it did in the red box supply zone in the past, we could see an expanded downward pattern.
Historically, AMD has experienced declines of up to 67% from its highs, which supports the possibility of further downside.
When to Buy?
Based on AMD’s historical behavior:
Optimal Buy Zone:
If AMD drops approximately 70%, reaching $35, it could represent a long-term investment opportunity.
This level aligns with key historical support zones and could serve as an excellent entry for investors looking to capitalize on AMD's growth potential.
Conservative Buy Levels for Upside Momentum:
First Entry: When AMD breaks above the weekly 20 EMA, currently at $140.35.
This level is still far from the current price.
Second Entry: Upon a breakout above the yellow box supply zone, which marks the upper boundary of the descending triangle pattern.
While the pattern and resistance trendline are broken, overhead supply zones remain significant obstacles.
Third Entry: If the purple box (Ichimoku Cloud) on the weekly chart provides support, this could also indicate a potential entry point.
Conclusion
AMD is a unique stock that may not be well-suited for gradual accumulation due to its high volatility and tendency for deep corrections.
While it has been a market leader during bullish periods, the stock’s history shows frequent, severe pullbacks of 70% or more. This makes timing critical for successful trades.
Bearish Outlook: The current trend is downward, and there’s potential for the stock to drop further, possibly to the $35 zone.
Bullish Outlook: For buyers, $35 could represent a once-in-a-decade opportunity to accumulate shares if AMD’s long-term growth narrative remains intact. Alternatively, entering on clear breakout levels with a cautious approach is advised.
Investors must remain patient and disciplined, waiting for either a deep correction or a confirmed trend reversal. Only then can AMD offer the high reward-to-risk opportunities it’s historically known for.
Let’s stay sharp and trade wisely. 🚀
