Advanced Micro Devices Inc. (NASDAQ:AMD) shares are trading lower Tuesday, and falling harder than the overall market, although the company released no news to explain the drop in price. The decline could be due to the company halting shipments to Russia because of the conflict with Ukraine.
AMD was down 8.28% at $113.13 at the time of publication.
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AMD Daily Chart Analysis
- Shares are falling in what traders call a descending channel after seeing a strong bullish run higher. This pattern may also be called a bullish flag pattern. The stock has been trading in this pattern since late 2021 and remains right between the channel's support and resistance. AMD could see a strong move in the same direction of a break either above resistance or below support.
- The stock is trading below the 50-day moving average (green) but above the 200-day moving average (blue), indicating the stock is consolidating. The 50-day moving average may act as an area of resistance, while the 200-day moving average may hold as support.
- The Relative Strength Index (RSI) has been moving sideways for the past few weeks and sits at 44. This shows that there are slightly more sellers than there are buyers, although the RSI has been bouncing above and below the middle line. This indicates the stock is consolidating and if the RSI starts moving heavily either up or down, the price may also make a strong push in the same direction.
What’s Next For AMD?
The stock is sitting in a period of consolidation and hasn’t been able to make a strong move in either direction yet. When the RSI begins to trend above or below the midline, the price will likely move in the same direction. A break above resistance or below support may end the consolidation period and cause the stock to see a period of bullish or bearish movement, depending on if support or resistance is broken.
Bullish traders are looking for the RSI to climb and for the stock to form higher lows up to resistance and break above that level.
Bearish traders are looking for the RSI to fall and for the stock to be unable to break above this resistance level. If the stock stays in the pattern for a long period of time but never is able to break below support, bears will still get to see a long period of downward movement.
