Hello traders and investors! AMD is flying, and this might be a reason for some people to get nervous – those who are in, and those who missed the opportunity. Let’s calmly analyze AMD through a technical view, and see what we can do here.
First, no, it is not a good time to buy. Regardless of what AMD will do next, the Risk/Reward ratio is not good right now. The moment to buy was after my analysis on Jul 16, when we nailed with astonishing precision the next movements on AMD (this one was a public analysis, link below).
We should always buy near supports, when we see a good buy pattern, preferably. If you plan to buy AMD, you should wait for it to form a bottom, or hit one of its support levels, which might be the 21 ema. If the momentum is strong enough, AMD will do a sideways correction, and the 21 ema will catch up with the price in the future, instead of dropping to lower levels.
But for now, we are trending, and the volume is very high, confirming the bullish bias (according to Dow Theory, 5th tenet). If you are on AMD, and is afraid of a pullback, or don’t want to lose profits, there’re two strategies for you, that can help you to rip off the useless emotions out of you, that are making you nervous and stressed.
First, a technical strategy is to set a trailing stop-gain under the previous day’s low, and if AMD loses it, then the market will simply cash you out. Then, just buy back near when AMD forms a bottom or gets closer to its support levels (sooner or later, it’ll do it).
Another strategy is to wait for a bearish structure in the 1h chart. In the chart above, you see an example of a bearish pivot point, which could cause a pullback on AMD in the daily chart. If you see a lower high/low, then it might be an excuse to sell. It could be a bearish pivot point, an H&S, a Double Top… Any bearish reversal pattern might work for you.
So far, AMD didn’t do any of these patterns, it didn’t trigger any trailing stop, and there’s nothing indicating it’ll drop. All we can assume is that it’ll keep flying, until we see a clear reversal sign (Dow Theory, 6th tenet).
What strategy you find more interesting? Remember to follow me to keep in touch with my daily studies!
Thanks for these chart walkthroughs and explainers! These charts were featured in Editors' Picks.
Nathan_Black
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@TradingView, I'm glad I could contribute! Thank you very much!
JRSone
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Appreciate your informative and cohesive posts as always Nathan. Much appreciation for your posts. 🙏
Jinvest11
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the trend is your friend until the end, could wait until the trend breaks, but then you may miss the top, but you also may miss extra gains by exiting the trend too soon
JRSone
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Could also lock in profits (capping unlimited upside gains) by selling covered calls, as they are at a high premium at the moment. Options market already looks to be expecting a pullback, as $126 strike calls are selling at a discount, with large premiums showing up on 8/27 credit put spread at $116/111 strikes. 👍
Hi Nathan, great study. Thanks. AMD, has great fundamentals and products, which will likely translate into strong future performance. One similar such technology stock with great fundamentals, unique products and market dominance is ASML. Would be great if you give your opinion on that :) TY
Nathan_Black
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@jcuypers, Noted. Tomorrow I'll make a video only about my followers ideas and I'll add ASML. Keep in touch.
Best regards.
Justin9244
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Hello. Where is the link to your analysis on Jul 16?