Stock of the day: AMD

On Wednesday we prepared analysed AMD. The last time we wrote a piece about this instrument was in October 2021 and back then we were very bullish. This is how we concluded our analysis:

“The whole correction was very technical. The price created a wedge pattern (orange) and the real buy signal comes from the fact that we broke the upper line of the wedge. In addition to that, the price broke the short-term horizontal resistance at 107.7. With all this in mind, the sentiment now is definitely positive”

It was an amazing analysis. One of the best we’ve done. The price took off almost immediately, surging from 110 USD to slightly over 160 USD! All that happened in one and a half months. Great call if you ask me.

At the end of November, the price reached its local top and a bigger bearish correction started. This is the reason why we’re returning to this instrument now. AMD is currently creating a huge Head and Shoulders formation (grey), which is very negative.

As you can see, it already broke the neckline of this pattern (blue), which in theory should give us a proper sell signal. As long as the price stays below the blue area, sentiment is negative. If the price climbs back above the blue resistance, it would cancel the sell signal and open up a buy signal, but this scenario is currently less likely to happen.