Important points
Taiwan Semiconductor Manufacturing (TSM) shares are likely to remain in focus ahead of the company’s fourth-quarter earnings report scheduled for Thursday’s opening bell, with investors betting on artificial intelligence (AI)-driven demand. is expected to boost performance.
Analysts expect the Taiwanese semiconductor giant to post a quarterly profit of $11.4 billion due to a surge in demand for advanced silicon used in AI infrastructure, according to Reuters. Investors will have high expectations after the company reported a 34% sales increase in 2024.
The semiconductor maker’s outlook and capital expenditures (CapEx) are under intense scrutiny as the company continues to spend billions of dollars on new factories amid the possibility of export restrictions and tariffs under the incoming Trump administration. There is a high possibility that it will.
TSMC stock is up 80% in 2024 and is up about 5% year-to-date through Friday’s close. The company’s stock price fell 3.5% in recent trading on Monday, following a sharp decline in semiconductor stocks.
Below, we analyze the technicals on TSMC’s chart and identify key price levels that could lead investors to an earnings report for the chipmaker.
Ascending triangle retest
TSMC stock broke out of an 11-week ascending triangle earlier this month on above-average volume, but has since pulled back to retest the pattern’s highest trend line.
Despite the recent stock price retrace, the Relative Strength Index (RSI) remains above the 50 mark, indicating that price momentum remains in favor of the bulls.
Let’s take a closer look at TSMC’s chart to identify potential bullish price targets if the stock moves into price discovery mode, as well as some key support levels worth monitoring during the decline. Let’s.
Bullish price target to watch
To predict the target price if a stock reaches a new all-time high, investors can apply the measurement movement technique, also known as the measurement principle.
This works by calculating the distance between two trendlines in an upward triangle and adding that distance to the first breakout point. For example, if you add $40 to $206, your goal is predicted to be $246. This is about 18% higher than Friday’s closing price, when investors decide to lock in profits.
Important support levels to track
Before Monday’s downtrend, the $206 level was a possible floor near the upper trend line of the ascending triangle.
But a fall now could send the stock down to around $190, a position on the chart that connects July’s notable highs with some of the peaks and troughs that formed from August to December. There is a possibility that there will be buying interest near the horizon.
Finally, a decisive break below that level opens the door for a fall to the $175 level. Buy-and-hold investors may seek to accumulate positions in this region around the August swing high, October swing low, and the nearby upward-sloping 200-day moving average.
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As of the date this article was written, the author did not own any of the securities mentioned above.
