Advanced Micro Device Can we bounce from 21 Weekly EMA?
Hi Guys! This is a Technical Analysis on Advanced Micro Device (AMD) on the 1 Week Timeframe.
Previously i posted a chart on the Daily Timeframe, mentioning of a potential breakout to the upside. But it was short lived as a fakeout, and we are down 7ish% since then.
To get an understanding of what went wrong, i decided to analyze the Weekly timeframe to get a bigger picture.
As you can see:
We have closed BELOW the SUPPORT line of the triangle.
We have also closed below this short term RED Horizontal support line.
And we are now Testing SUPPORT on the 21 Weekly EMA.
This is a Major development in my opinion.
21 EMA is used to determine trend:
->If its ABOVE = BULLISH
->If its BELOW = BEARISH
Whenever we are ABOVE the 21 EMA, its important for the BULLISH trend to have price action test SUPPORT on the EMA, every now and then.
For the BULLISH Trend to continue, we need CONFIRMATION that the 21 EMA indeed acted as SUPPORT.
But there is also the case, of the 21 EMA not being able to maintain SUPPORT.
So whats more likely in our current situation?
In my Opinion, its becoming more likely or probable that we BREAK BELOW 21 EMA.
For me and for more evidence i like to use INDICATORS.
Ive highlighted some Scenarios that mirror our current developments in the 3 indicators ive added.
Notice the Differences between how far we drop under the 21 EMA and the variations found in the indicators.
For Price action to weaken and drop below 21 EMA, 3 things need to happen:
1. RSI -> Showing the Orange line break support and move BELOW the Black line. The longer stay below and continue lower, more likely for price declines.
2. MACD -> BEAR CROSS, (Blue line below Orange line) and the appearance of Red Histogram.
3. STOCH RSI -> Below the 20 level. The longer we stay below this level, more likely for price decline
We are currently in this SCENARIO, highlighted by BLACK BOX.
So now to determine exactly how far BELOW we go, If we do break SUPPORT.
To gauge at that, we look LEFT and we look at the specific changes/ differences in the indicators.
For LARGER PRICE DECLINES like in Scenario #3 and #4
-> MACD Histogram Bars were LARGE
-> MACD Blue/Orange lines moved BELOW 0 level
-> STOCH RSI for #3 continued for about 133 days (longest compared to other scenarios).
-> RSI Orange line stayed below Black line for extended period
Now notice #1 and #2
-> The indicators didnt show extreme variations as seen in #3 and #4
-> Scenario #2 Price action was below 21 EMA for a decent amount of time but it was consolidating, rather than having a major decline.
-> Though the RSI Orange line was below the Black for extended time,
-> the STOCH RSI was at oversold area for 119 days,
-> the MACD Orange/Blue line NOT dose diving BELOW 0 level, helped price action maintain a range before moving back over 21 EMA.
We have to keep in mind though that history DOES NOT have to repeat and that a new scenario can be possible
BUT Main thing to watch is the size of the histograms of the MACD and whether or not we stay ABOVE the 0 level, in my opinion.
A level to look at is the SUPPORT line labeled "MAJOR SUPPORT".
IF we do close BELOW 21 EMA, it becomes more likely we test this line.
________________________________________________________________________________
Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again.
Stay tuned for more updates on AMD in the near future.
If you have any questions, do reach out. Thank you again.
DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. Do not use my ideas for the basis of your trading strategy, make sure to work out your own strategy and when trading always spend majority of your time on risk management strategy.
Previously i posted a chart on the Daily Timeframe, mentioning of a potential breakout to the upside. But it was short lived as a fakeout, and we are down 7ish% since then.
To get an understanding of what went wrong, i decided to analyze the Weekly timeframe to get a bigger picture.
As you can see:
We have closed BELOW the SUPPORT line of the triangle.
We have also closed below this short term RED Horizontal support line.
And we are now Testing SUPPORT on the 21 Weekly EMA.
This is a Major development in my opinion.
21 EMA is used to determine trend:
->If its ABOVE = BULLISH
->If its BELOW = BEARISH
Whenever we are ABOVE the 21 EMA, its important for the BULLISH trend to have price action test SUPPORT on the EMA, every now and then.
For the BULLISH Trend to continue, we need CONFIRMATION that the 21 EMA indeed acted as SUPPORT.
But there is also the case, of the 21 EMA not being able to maintain SUPPORT.
So whats more likely in our current situation?
In my Opinion, its becoming more likely or probable that we BREAK BELOW 21 EMA.
For me and for more evidence i like to use INDICATORS.
Ive highlighted some Scenarios that mirror our current developments in the 3 indicators ive added.
Notice the Differences between how far we drop under the 21 EMA and the variations found in the indicators.
For Price action to weaken and drop below 21 EMA, 3 things need to happen:
1. RSI -> Showing the Orange line break support and move BELOW the Black line. The longer stay below and continue lower, more likely for price declines.
2. MACD -> BEAR CROSS, (Blue line below Orange line) and the appearance of Red Histogram.
3. STOCH RSI -> Below the 20 level. The longer we stay below this level, more likely for price decline
We are currently in this SCENARIO, highlighted by BLACK BOX.
So now to determine exactly how far BELOW we go, If we do break SUPPORT.
To gauge at that, we look LEFT and we look at the specific changes/ differences in the indicators.
For LARGER PRICE DECLINES like in Scenario #3 and #4
-> MACD Histogram Bars were LARGE
-> MACD Blue/Orange lines moved BELOW 0 level
-> STOCH RSI for #3 continued for about 133 days (longest compared to other scenarios).
-> RSI Orange line stayed below Black line for extended period
Now notice #1 and #2
-> The indicators didnt show extreme variations as seen in #3 and #4
-> Scenario #2 Price action was below 21 EMA for a decent amount of time but it was consolidating, rather than having a major decline.
-> Though the RSI Orange line was below the Black for extended time,
-> the STOCH RSI was at oversold area for 119 days,
-> the MACD Orange/Blue line NOT dose diving BELOW 0 level, helped price action maintain a range before moving back over 21 EMA.
We have to keep in mind though that history DOES NOT have to repeat and that a new scenario can be possible
BUT Main thing to watch is the size of the histograms of the MACD and whether or not we stay ABOVE the 0 level, in my opinion.
A level to look at is the SUPPORT line labeled "MAJOR SUPPORT".
IF we do close BELOW 21 EMA, it becomes more likely we test this line.
________________________________________________________________________________
Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again.
Stay tuned for more updates on AMD in the near future.
If you have any questions, do reach out. Thank you again.
DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. Do not use my ideas for the basis of your trading strategy, make sure to work out your own strategy and when trading always spend majority of your time on risk management strategy.
1. We break above & CONFIRM ABOVE Resistance trendline
2. If we break below and CONFIRM BELOW Support Trendline.
Dont take trades in the triangle, you'd be setting up for failure.