On Dec. 21, Advanced Micro Devices, Inc (NASDAQ:AMD) broke up from a weekly bull flag pattern Benzinga called out on Dec. 16. The flag of the pattern was needed for a period of consolidation after AMD’s stock soared over 64% between Oct. 1 and Nov. 30 to reach an all-time high of $164.46.
While the general markets were tumultuous over the end of November and much of December, AMD went through a slow downwards progression, which demonstrated the stock was strong despite the pull back.
The semiconductor space has been strong due to high demand and on Dec. 23 AMD announced it will purchase $2.1 billion worth of wafers from its chip-producing spin off factory, GlobalFoundries Inc, between 2022 and 2025. The number has increased from the 1.6 billion AMD originally planned to purchase.
With the “Santa Claus rally” possibly continuing this week and into the beginning of January, AMD looks set to fly although it will need to battle a few areas of resistance to reach blue skies.
See Also: How Will The Intel Vs. AMD Rivalry Pan Out In 2022?
The AMD Chart: After breaking up from the bull flag pattern, AMD shot up 10% between Wednesday and Friday, which allowed the stock to print a higher high above the Dec. 16 high of $147.93. The higher high will give bulls more confidence going forward because it further confirms the uptrend is intact.
On Dec. 20, technical traders may have been able to tell the most recent higher low was in because AMD printed a doji candlestick on the daily chart. The doji candlestick is often found at the bottom or the top of a trend and indicates a reversal may be in the cards.
If the bull flag pattern on the weekly charts continues to be recognized, the measured move of the pattern is equal to the length of the pole, which in this case is 64%. The number is then added to the bottom of the flag formation and indicates AMD could trade up toward the $215 area in the future.
AMD is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA about to cross above the 21-day, both of which are bullish indicators. The stock is trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.
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- Bulls want to see big bullish volume come in and push AMD up above a resistance level at $147.19. Above the level, the stock has resistance at $155.65 and at its previous all-time high.
- Bears want to see big bearish volume come in and drop AMD down below the EMAs and back into the flag, which would indicate the break from the pattern was a bull trap. The stock has support below at $138.52 and $130.60.
