AMD is currently facing a real problem as it is forming a rising wedge, which is a bearish pattern. If the price breaks below the blue dotted line, it would trigger a short position with the initial target at the blue line, which represents the 50-day moving average (MA).
Yesterday, there was a significant bearish reversal candlestick pattern known as an engulfing pattern. It had occurred in high volume, suggesting that some news or event triggered a strong selling pressure, which is a bearish sign.
The relative strength index (RSI) is indicating strong bearish negative divergences, which often precede a price decline.
Furthermore, the moving average convergence divergence (MACD) indicator also exhibits bearish divergences, and there could be a cross-over signal between the MACD line and the signal line soon, indicating a potential change in direction.
Considering all these factors, if the price breaks below the lower dotted line, it would be a signal for bears to initiate a short position with the 50-day MA as the target. A stop loss should be placed above the recent highs to manage risk, and this trade would represent a high probability setup.
On the other hand, for bulls to regain control, they would need to keep the price at these levels for several more days. Consolidation should occur on lower volume without an increase in volume during red candlesticks.
Taking into account the overbought conditions of QQQ and SPY, especially QQQ on both daily and weekly timeframes, and considering the diminishing hype around AI, I assess there is a higher likelihood of a bearish scenario unfolding.
Yesterday, there was a significant bearish reversal candlestick pattern known as an engulfing pattern. It had occurred in high volume, suggesting that some news or event triggered a strong selling pressure, which is a bearish sign.
The relative strength index (RSI) is indicating strong bearish negative divergences, which often precede a price decline.
Furthermore, the moving average convergence divergence (MACD) indicator also exhibits bearish divergences, and there could be a cross-over signal between the MACD line and the signal line soon, indicating a potential change in direction.
Considering all these factors, if the price breaks below the lower dotted line, it would be a signal for bears to initiate a short position with the 50-day MA as the target. A stop loss should be placed above the recent highs to manage risk, and this trade would represent a high probability setup.
On the other hand, for bulls to regain control, they would need to keep the price at these levels for several more days. Consolidation should occur on lower volume without an increase in volume during red candlesticks.
Taking into account the overbought conditions of QQQ and SPY, especially QQQ on both daily and weekly timeframes, and considering the diminishing hype around AI, I assess there is a higher likelihood of a bearish scenario unfolding.
Comment:
rising wedge, powerful formation :) will close half position if we close day above 8 MA
Consistency is the key of success....