Key Takeaways
- AMD shares fell again on Thursday, after joining a sector-wide sale following news that the U.S. has imposed new license requirements on some AI chips exported to China.
- The stock recently formed a piercing price pattern, which is a two-day candlestick pattern that indicates a possible reversal of a downward trend into an upward trend.
- Investors should watch major support levels on AMD's chart around $76 and $65, while also monitoring key resistance levels near $116 and $150.
Advanced Micro Devices shares fell again on Thursday, after the chipmaker had joined a sell-off across the sector following news that U.S. authorities had imposed licensing requirements for some AI chip imports to China.
AMD stated via a filing with the regulatory authorities that the new chip restrictions would result in it being charged up to $850 million for the export of the MI308 graphics unit (GPU), designed for applications requiring high computing power, such as AI or gaming.
AMD shares have fallen 28% since the beginning of the year, and 43% in the past 12 months. This is due to concerns about a slowdown in AI infrastructure spending as well as the company’s failure to capture a larger share of the AI chips market from Nvidia (NVDA), the sector leader. The Trump administration’s trade policies have increased the uncertainty surrounding this stock.
Below we analyze AMD’s weekly chart and identify key price levels that investors are likely to be watching.
Reversal of Piercing Pattern Marks
AMD shares plunged in December below the neckline formed by a head-and-shoulders formation. They continued to fall sharply until last week, when they began to rise on volume. This could have been the beginning of a long-term reversal.
Importantly, it created a piercing candlestick pattern, which is a two-day price pattern that can indicate a possible reversal in trend from a downward to an upward one.
This week, however, the selling resumed, and the relative strength (RSI) retreated to oversold levels, confirming a bearish short-term momentum. Investors should look for the indicator to break out above the falling wedge that has been formed over the last seven months.
Applying technical analysis to AMD chart, let’s find major support and resistance levels.
Major Support Levels to Keep an Eye
AMD shares fell 0.9% Thursday to $87.50.
The first level to watch is around $76. This area would be likely to attract significant attention near last week’s lowest level, which also closely matches a range of trading activity on the graph stretching back to Sept 2020.
Selling below this support level opens the way for a return to $65. Investors can look for opportunities to buy near the December 2020 retracement level, a region that marked the start of the 14-month upward trend in the stock.
Important Resistance Levels To Watch
If the shares move higher, they could reach around $116. This area is characterized by a convergence of selling pressure near 200-week moving, the countertrend high of last month, and a range comparable price points in the chart going back to August 2021.
Finally, a long-term trend change in the stock may fuel a rally towards $150. Investors who bought shares during the downtrend of the stock may be looking for opportunities to take profits near the horizontal line connecting several minor peaks between December 2021-August last year. AMD shares can also be affected by the timing of a move in this direction.
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