AMD: Ready to Break Out – Confluence Supports and Bullish Patter
Обновлено
I’ve already written a weekly analysis on 
AMD, which you should read before this one, as it explains the broader technical and fundamental support in the bigger picture.
Looking at the 4-hour chart, we can see the more granular movement of the stock over the last few months. The fact that we held the trendline, which has been in place since 2023, is a good sign that overarching algorithms still have an interest in the stock. The trendline also corresponds to a so-called "confluence support," where multiple support levels overlap.
1. Trendline
Trendlines alone are not reliable price action structures, as they are often broken during consolidations without affecting the overall trend. However, since this trendline is older, has been tested multiple times, and now coincides with other support levels, it serves as one of several building blocks.
2. Fibonacci Retracement
We hit the 61.8% Fibonacci retracement (horizontal yellow line) exactly and bounced upward from there. The 61.8% Fib is always a good reversal point during pronounced consolidations, as we’ve seen here. AMD has been consolidating since March 2024, over nine months now.
3. Horizontal Support
In addition to the Fibonacci retracement, the price range between $117 and $121 was already a support area. This zone has been a support and resistance level since September 2021 and has consistently prompted strong price reactions.
4. Descending Wedge
The current leg down is forming a descending wedge, which breaks upward in more than two-thirds of cases, making it a bullish pattern. The target for a breakout is typically the highest point of the wedge, which currently means a target around $170. However, a conservative trader always plans more cautiously, so we’ve combined our target with the last gap close.
5. Gaps
While not a proper support level, the still-open daily gaps at $137 and $158 act as magnets for higher prices. These gaps lie along the path upward and make good spots to place take-profit levels.
Fundamental Reasons
AMD, which you should read before this one, as it explains the broader technical and fundamental support in the bigger picture.Looking at the 4-hour chart, we can see the more granular movement of the stock over the last few months. The fact that we held the trendline, which has been in place since 2023, is a good sign that overarching algorithms still have an interest in the stock. The trendline also corresponds to a so-called "confluence support," where multiple support levels overlap.
1. Trendline
Trendlines alone are not reliable price action structures, as they are often broken during consolidations without affecting the overall trend. However, since this trendline is older, has been tested multiple times, and now coincides with other support levels, it serves as one of several building blocks.
2. Fibonacci Retracement
We hit the 61.8% Fibonacci retracement (horizontal yellow line) exactly and bounced upward from there. The 61.8% Fib is always a good reversal point during pronounced consolidations, as we’ve seen here. AMD has been consolidating since March 2024, over nine months now.
3. Horizontal Support
In addition to the Fibonacci retracement, the price range between $117 and $121 was already a support area. This zone has been a support and resistance level since September 2021 and has consistently prompted strong price reactions.
4. Descending Wedge
The current leg down is forming a descending wedge, which breaks upward in more than two-thirds of cases, making it a bullish pattern. The target for a breakout is typically the highest point of the wedge, which currently means a target around $170. However, a conservative trader always plans more cautiously, so we’ve combined our target with the last gap close.
5. Gaps
While not a proper support level, the still-open daily gaps at $137 and $158 act as magnets for higher prices. These gaps lie along the path upward and make good spots to place take-profit levels.
Fundamental Reasons
- AMD's Position: With the launch of the MI300 series, AMD has taken a significant step toward competing with NVIDIA in the AI GPU market. These chips are optimized for high-performance computing and generative AI.
- Potential: In Q3 2024, AMD generated $1.5 billion in revenue from the data center segment, a 42% year-over-year growth. This growth is expected to accelerate further in 2025 due to AI applications.
- Market share: AMD has consistently gained market share from Intel in the CPU market, especially in the server segment. According to Mercury Research, AMD’s server CPU market share rose from 23.4% in Q3 2023 to 26.5% in Q3 2024.
- Forecast: With the planned launch of Zen 5 processors in H2 2025, AMD is expected to gain even more market share, driven by improved performance and energy efficiency.
- EV Market: Additionally, the electric vehicle market, after weaker years in 2023 and 2024, is expected to regain momentum. This will significantly impact the semiconductor market as a whole.
Сделка активна
Our "friends" at HSBC wanted to help us with this trade and published a sell rating, lowering their target from, I think, $210 to $110. I've heard that selfish action was to hedge their options on AMD. Since the technical setup is intact and the fundamental valuation becomes more attractive when looking at growth potential in 2025, this trade is still a high chance and high ROI.
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