Advanced Micro Devices, Inc. (AMD) is trading lower early Wednesday as traders react to the company's second-quarter results. Let's look at the charts to see if this decline will be serious or just a minor dip.
In the daily bar chart of AMD, below, we can see that prices gapped lower and are testing the rising 50-day moving average line. The slower-to-react 200-day line has begun to flatten. Trading volume has slowed the past two months suggesting diminishing commitment to the long side. The daily On-Balance-Volume (OBV) line has been rising slowly from late October but it has slowed the last two months.
In the bottom panel is the 12-day price momentum study, which shows a lower high from June to July, meaning that the pace of the rise has slowed and it is a bearish divergence when compared to the price movement making higher highs.
In the weekly bar chart of AMD, below, we can imagine that prices are lower and below the recent lows of this month, which means that a number of recent buyers are "under water." Trading turnover has slowed the past twelve months and the weekly OBV line has been neutral for several months.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but it should be narrowing in the weeks ahead.
In this updated Point and Figure chart of AMD, below, we can see Wednesday's decline with no gap. A downside price target around $28 is indicated.
Bottom-line strategy: If AMD declines to the Point and Figure target of $28 it will mean that the 50-day moving average line was broken and the late June low too. AMD would be at the top end of a $28-$26 support area, which may be tested.