Another very popular semiconductor stock is AMD stock. This stock has been a steady winner over the years. Is it a good time to buy this stock?
If you know about Nvidia and Intel and AMAT and MU, you will certainly know about AMD.
In this article, we will be using technical analysis to help us determine whether this is a good time to trade or invest in this stock.
The charts that I have saved are from March 25 2022, so if you are reading this from the future do take that into consideration. The short term charts would have been obsolete but longer term charts below might still be beneficial to your analysis.
Let us begin by looking at the daily chart of AMD stock. This is usually the timeframe that most people will look at. I think that AMD is trying to form a bottom. There were multiple times that the stock drop to around $100 but it has not been able to stay below $100.
Round numbers like $100 can be very powerful support areas. As they are also psychological support areas as well. So as long as AMD stays above $100, then it is very likely that the stock will move up in the near future.
AMD has broken above trend line 2. This is a good sign. I would really like it to break above trend line 1 because the trend line extends from the top to the lows of this stock's journey from December to March. A break above this kind of trend lines are a more powerful indicator of trend reversal than the one like trend line 2.
AMD has also gone back above the daily 20 MA, 50 MA and the 200 MA. This is usually a powerful signal that the stock really wants to bottom and move back up.
However, the stochastics are a bit overbought so this could result in some short term weakness. Not a problem for investors as long as the stock stays above $100 but it can be a problem for short term traders who have to be more perfect in their timing.
Anyway if Nasdaq and the likes of NVDA moves higher, this will help AMD's stock to overcome this overbought signal.
With the daily chart being dealt with, let us now move on to the weekly chart.
There are a few very positive things going on for the long term investor of AMD. First of all, a possible double bottom chart pattern may be forming in the stock. The double bottom can be a powerful bullish reversal pattern and can hint the end of this recent sell off.
AMD is sitting at long term support 1. This is made by a previous consolidation. If that is not enough, there is another long term support below which I have labeled long term support 2. It is not easy for the stock to slash through this areas.
Therefore, this could be a very good time for the long term investor to buy some of this stock.
Weekly stochastics are oversold and the MACD Histogram is shortening which tells us that bearish momentum is slowing down. Eventually a MACD buy signal may form in the weekly chart and this could help to lift the stock.
The monthly chart above shows how AMD has been a steady winner over the years.
Notice how the stock has been trading above the rising monthly 20 MA and 50 MA and this is a picture of long term strength. As long as the stock's 20 MA and 50 MA is rising, we should be bullish bias in the long term.
There is long term support below and currently the stock is at the monthly 20 MA. What is interesting is that a monthly bottoming tail may be forming. We have not ended the trading month of March but most likely the monthly bottoming tail will materialize.
There are 2 instances in the past where the stock rose nicely after the presence of a monthly bottoming tail.
For longer term investors who want a little bit of timing, one could wait for the end of the month and purchase the stock the next month when it breaks above the highs of the March monthly bottoming tail.
For short term timing...let us look at the 60 min chart of AMD.
Well, the train for bottom fishing has left long ago. The correct short term buy area was when the stock broke above a 60 min downtrend line. That was also when a 60 min double bottom chart pattern was forming in AMD's stock.
There seems to be an ascending triangle bullish continuation pattern yesterday. Notice the heavy volume as it broke out of the pattern. No doubt there were many smart traders who saw the pattern or breakout and entered the stock.
A stop loss could be put at the lows of the pattern and as long as the stock stays above the lows of the 60 min ascending triangle, it is very likely to go higher. AMD is still trading above the rising 60 min 20 MA and 50 MA. So you might want to stay bullish on the stock for the short term as long as it is above the 60 min 20 MA and 50 MA. If it drops below it, then we might experience some correction.
Hopefully this article helps you whether you are thinking of investing in AMD or trading AMD.
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