The semiconductor index has been one of the best performing areas of the market over the last few quaters, and has continued to be strong since the late October bottom. The index is coming into overhead fibonacci resistance, and with weakening momentum starting to show up, similar to July last year, a pullback here looks likely.
It seems hard to imagine with all of the AI lead optimism, but this sector could see some retrace back to the 3100s to reset sentiment.
If the indicated resistance region is broken, the next likely targets are substantially higher. Will be monitoring for a reversal pattern to emerge and confirm the time has come to exit longs and consider a short trade.
Comment
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Price reached the lower end of the resistance region today after NVDA earnings propelled the group higher
Trade active
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SOX made a lower low today with the recent weakness in NVDA, AMD, and other semi names. Price broke under the prior swing low of 4829 from March 5th. The recent weakness opens the door to a momentum reversal. Looking at the SMH etf with AH hours price action, there is a clear H&S top potential in place