AMD May Decline to 60-63 Before Reversing Higher

16 мая 2022 г.

Summary: Elliott Wave and Fibonacci analysis point to further downside in the next few weeks / months in AMD. (The current countertrend rally could continue for a few more days first.) A reasonable target for the downside is 60.86 to 63.82. Afterwards, price action should be evaluated at the 60-63 level for any evidence of a trading low for intermediate-term traders or even longer-term investors. However, even at these unexpectedly low prices, stops should still be used in the event the stock has another leg or two lower.

Elliott Wave Analysis

Since reaching an ATH of 164.46, popular semi-stock AMD remains in a clear downtrend, as evidenced by lower highs and lower lows, a well-respected downtrend line, and downward-sloping 21-day and 34-day EMAs.

Elliott-wave (EW) analysis starting at the ATH shows motive trendlike action to the downside starting at the ATH of 164.46 in November 2021.

• Larger-degree wave A appears to have ended January 28, 2022, at a low of about $99.35.
  
  
• Larger-degree wave B then formed a zigzag countertrend move ending on February 9, 2022, at a high of 132.96. Note that this early February 2022 bounce in AMD coincided with the sharp bear rally in the broader markets.
  
  Note this this "larger-degree" trend analysis assumes that the correction downward is an ABC corrective pattern. This could alternatively be deemed a larger-degree 5-wave pattern, depending on the larger-degree wave count that ended at the all-time high. This analysis does not delve into the multi-year EW count as that is not necessary for a short-term / intermediate-term trading perspective.
  
  In other words, regardless whether the larger-degree trend is an ABC corrective pattern or a 5-wave impulse move, the trend is downward. Further, wave C corresponds to a wave 3 in a larger-degree 5-wave move, so a larger-degree wave C and a larger-degree wave 3 would both comprise intermediate-term sub-waves that are impulsive to the downside (with corrective rallies retracing portions of those moves).
  

Please let me know if interested in the subwaves counts of the A-B-C waves, in which case I can post an update with a chart containing those. Including those on the main chart can clutter and obscure the chart with too many lines, confusing the main point.

Fibonacci Analysis

In the discussion above, the assumption is made that the larger-degree EW count is an A-B-C pattern starting at the ATH of 164.46. However, this could alternatively be a larger-degree 5-wave move off the highs, which would likely result in lower price targets. The Fibonacci analysis relies on the more conservative assumption that the entire decline from the ATH is an ABC rally.

With this conservative assumption, one can reasonably assume that wave A and wave C will be approximately equal. Projecting the length of wave A from the start of wave C results in a target of 60.86. This lines up with another key level of 63.82—the .618 retracement of a multi-year rally from 2015 lows near $1.61 (split adjusted).

Trend Reversal

Lastly, after AMD reaches the above price-targets, it could rally hard, retracing 50% to 61.8% of the entire downtrend from the ATH. This is not a prediction, but a discussion of a possibility that should be considered only after the price targets have been reached. At that time, the overall price picture and signs of exhaustion should be considered, as well as whether support at lows have held on any retest.

12 июл. 2022 г.

Заметка

This analysis is still playing out as expected, although admittedly, the bounce through the downward trendline was unexpected. But this bounce turned out to be a false break (whipsaw). The evidence still supports the view that 60.86 to 63.82 will be a viable downside target.