AMD Ready for Takeoff??! or Has the "Bubble" Burst??!!AMD has been consolidating in a horizontal trade range for over a month. The stock recently bounced from the .618% Fib Level on a Bullish retracement from the low of 5/2/24 to the high made on 5/28/24 using the 65m timeframe. A more fine-tuned look at price action reveals a Descending Channel as well as a Falling Wedge/Bull Flag pattern seen on the daily timeframe.
What I'm Watching:
1.Price has been falling on decreasing volume ever since rallying from the .618% Fib Level previously referenced when analyzing the daily timeframe.
2. Monitoring RSI(D) in anticipation of Bullish Divergence should the stock make a slightly Lower Low or the RSI(D) to break above 50 and hold, indicating buyers are in control.
3. The stock reclaiming the 5MA(D), 20MA(D), and 50MA(D) with increasing volume. The stock is currently trading beneath all three, each of which could serve as entry points, profit targets, or stop losses along the way.
4. Possible Inv H&S pattern to form on the daily timeframe with the head being formed by a DBL BTM at/near the LOD from 6/18/24. The neckline would then be at/near the upper Bollinger Band(D) and the 100MA(D). Should the stock reach that level, it would need to be re-evaluated at that time for strength or weakness.
*It should be noted that Q2 Earnings is slated for
Tuesday 7/30/24 and could affect price action.
Entry:
1. Early entry would be a bounce from the top of the Buy Zone. This entry should only be taken if a Bullish pattern formation on a smaller time frame is identified at the level.
3. A more conservative early entry would be a retest of the top of the Falling Wedge/Bull Flag pattern after a break above. Would be watching the top of the Buy Zone, the Ascending Support Zone(D) or strength above the .5% level of the previously mentioned Fib Retracement for added confluence.
2. Ideal Entry would be a Bullish pattern formation on a smaller timeframe signaling a bounce from the bottom of the Buy Zone. Especially if the Lower Bollinger Band, .618% level of the previously referenced Fib Retracement, Bottom of the Falling Wedge/Bull Flag(D), and Ascending Support Zone(D) all can be referenced as support creating confluence. This could create the possible DBL BTM with the LOD on 6/18/2024.
Exit:
Stop Loss should be based on Risk Management and Entry Setup. The logical areas are discussed below in the "Things to cautious of" section, however, keep in mind that the obvious Stops get hit the majority of the time. The best defense against this is a solid entry.
Profit Targets should be based on Risk Tolerance and Time Horizon. Any of the moving averages mentioned before or levels of resistance depicted on the chart could serve as a potential target from here. The main thing to remember is that the stock will not go up nor down in a straight line.
Things to be cautious of:
1. A break and close below the Buy Zone on the daily timeframe.
2. A break and close below the Ascending Support Zone(D).
3. A break and close below the bottom of the Descending Channel(D).
*It should be noted that the market can do anything at any time, therefore none of these scenarios would automatically invalidate this theory, however each one of them would significantly lower the probability of a Bullish move at this particular moment in time. With all that said a break and close below the LOD on 5/14 would more than likely completely invalidate this thesis and stock should be given time to reevaluate,
