Key Takeaways
- Micron shares rose in extended trading on Thursday after the chipmaker reported better-than expected results and issued an optimistic outlook, boosted by a surge in demand for AI.
- The stock found recent buying interest near a lower trendline in a symmetrical triangular pattern. It could break above the pattern on Friday following the company’s positive results.
- Investors should watch key overhead areas on Micron's chart around $107, $130, and $200, while also monitoring a crucial support level near $85.
Micron Technology shares rose in extended trading on Thursday after the chipmaker reported better-than expected results. The company also issued a positive outlook bolstered with a surge in demand for AI.
The data center revenue of the memory chip maker, a Nvidia (NVDA), tripled in the second quarter fiscal year over a previous year due to strong demand for high-bandwidth chips used in systems which develop and run AI software.
Micron shares gained 22% in value since the start the year, as of Thursday’s close. However they are only 7% higher than where they were a year ago. This is because the growth of demand for Micron’s AI products has been partially offset with the slowdown of demand for its chips for smartphones and PCs. Stock rose 1% in Thursday’s after hours trading to $104.
Below, we analyze the technicals in Micron’s chart and highlight important price levels.
Triangle Breakout Potential: Symmetrical Triangle
Micron shares are trading within a symmetrical triangular pattern since September last year. This could be a continuation pattern before another move higher.
After the company’s positive results, the stock could break out above this pattern on Friday.
Let’s use technical analysis on Micron’s chart in order to identify three important overhead areas that investors are likely to be watching. We will also identify a crucial level of support worth monitoring when the stock’s price drops.
Key Overhead Areas for Watch
The shares could initially move up to $107 if earnings-driven buying is above the symmetrical triangular pattern. This area is a strong overhead resistance, near the 50-week average and a line that connects price points in the chart going back to April 2024.
A move above this region could spark a rally up to $130. Investors looking to sell shares that they have acquired at lower levels can look for exits in this area near last year’s peak in April. This region also closely aligns with the range of closing prices located just below the all-time high set in June.
Investors can use bars patterns analysis to forecast a possible upside target above ATH. To use this technique, we overlay the price bars from the low of this month over the price bars from October 2023. The analysis predicts a price target of around 200 dollars, which is nearly double Micron’s Thursday closing prices.
This trend was chosen because it followed a symmetrical triangle earlier on the chart. This provided insight into how a future rise in the stock could play out.
Monitors that are essential to monitor
Investors should be on the lookout for pullbacks of Micron shares. The $85 level is a good place to start. This area would likely be the support for Micron shares, as it is near a series of lows that extend back to last August and a consolidation phase that formed on a chart in December and January 2024.
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As of the date of this article, the author owns none of the above securities.
