Shares Jumped More Than 4% on Monday

Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • Advanced Micro Devices jumped Monday on news the chipmaker beefed up its AI portfolio with a $4.9 billion purchase of data center infrastructure provider ZT systems.
  • AMD shares have recently trended higher from the lower trendline of a descending channel, though trading volumes have remained below-average throughout the majority of the move, indicating a lack of conviction by larger market participants.
  • AMD shares may find support at key chart levels including $150 and $122, but encounter resistance around $184 and $211.

Advanced Micro Devices (AMD) jumped more than 4% Monday on news that the chipmaker had beefed up its artificial intelligence (AI) portfolio with a $4.9 billion cash and stock purchase of data center infrastructure provider ZT systems.

Since reaching their record closing high in early March, AMD shares have lost about a quarter of their value, in part over concerns that the chipmaker wasn’t capitalizing on the booming AI chip market, currently dominated by rival Nvidia (NVDA).

Below, we take a closer look at AMD’s chart and use technical analysis to zone in on important price levels investors will likely be watching.

Stock Trades Within Descending Channel 

AMD shares have oscillated within a descending channel since a bearish engulfing pattern marked the stock’s record high in early March. More recently, the price has trended higher after finding buying interest around the channel’s lower trendline, though trading volumes have remained below-average throughout the majority of the move, indicating a lack of conviction by larger market participants.

It’s also worth pointing out that the 50-day moving average (MA) crossed below the 200-day MA last week to form an ominous death cross, a chart pattern that predicts lower prices.

Looking ahead, investors should monitor several key support and resistance price levels on AMD’s chart that may come into focus.

Support Levels to Monitor

An initial support area to watch sits around $150, just 3% below Monday’s closing price. This area may attract buyers seeking entry points near a trendline connecting several peaks and troughs between December and July.

A deeper retracement could see shares fall to the $122 area, a location on the chart where investors may look for buying opportunities near the November high, which also closely aligns with this month’s low.

Resistance Areas to Watch

Ongoing buying could drive a rally up to the $184 region just above the channel’s upper trendline, where the price would likely run into overhead resistance near a horizontal line linking a range of comparable trading levels between January and April with the prominent July swing high.

A more bullish move could see the stock climb to around $211, an area on the chart where sellers may look to lock in profits near a range of similar prices just below the record high.

AMD shares gained 4.5% Monday to close at $155.28.

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