Key Takeaways
Advanced Micro Devices Inc. surged on Monday on news that the company is acquiring data center infrastructure provider ZT Systems for $4.9 billion, strengthening its AI portfolio. AMD shares have recently been trending up from the lower trendline of the descending channel, but trading volume has been below average for much of the move, indicating a lack of conviction among larger market participants. AMD shares may find support at key chart levels such as $150 and $122, but could encounter resistance near the $184 and $211 levels.
Shares of Advanced Micro Devices (AMD) soared more than 4% on Monday on news that the company is acquiring data center infrastructure provider ZT Systems for $4.9 billion in cash and stock, bolstering its artificial intelligence (AI) portfolio.
AMD shares have lost about a quarter of their value since hitting an all-time high in early March, due in part to concerns that the company isn't profiting from the fast-growing AI chip market currently dominated by rival Nvidia (NVDA).
Below, we'll take a closer look at AMD's chart and use technical analysis to highlight key price levels that investors may want to keep an eye on.
The stock is trading inside a descending channel
AMD shares have been fluctuating within a descending channel since hitting an all-time high in a bearish engulfing pattern in early March. Recently, buying interest has been seen near the lower trendline of the channel, pushing the price higher, but trading volume has been below average for much of the movement, indicating a lack of conviction among larger market participants.
It is also worth noting that last week, the 50-day moving average (MA) dipped below the 200-day MA, forming an ominous death cross, a chart pattern that predicts a price decline.
Going forward, investors should keep an eye on some key support and resistance price levels that may be of interest on AMD's charts.
Support levels to monitor
The first support area to watch is near $150, just 3% below Monday's close. This area could attract buyers looking for an entry point near the trendline that connects several peaks and troughs from December through July.
Any further declines could send the stock to the $122 region, where charts show investors may be looking for buying opportunities near the November highs, which are roughly in line with this month's lows.
Notable resistance areas
Continued buying could lead to a rally to the $184 area, just above the upper trendline of the channel, at which point prices would likely encounter resistance on the upside near a horizontal line connecting a series of comparable trading levels from January through April and July’s notable swing high.
Further bullish action could send the stock surging to the $211 region, an area on the chart where sellers may try to lock in profits around a similar price range just below the all-time high.
AMD shares rose 4.5% on Monday to close at $155.28.
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