In this educational article, we focus on analyzing a breakout stock chart. This AI-semiconductor stock has everything it takes to push higher, start and confirm a breakout which might push the price of this AI-stock 20% to 100% higher. We focus on chart analysis in this educational post.
Fundamentally, this stock is at a pivot point in its growth: close to become profitable, a very strong pipeline of contracts and revenue, working for a large semis company as a supplier. All financial metrics are good, especially EPS growth next year (a stunning 12-month expected EPS growth which lead to its EPS doubling and tripling).
That’s also what is visible on the charts – a pivot point is here.
The daily chart reminds us of our strongest stock pick eve (Core Lithium in 2021 which eventually went up 900% in 18 months). In chart terms, this a W-reversal blended with a cup-and-handle. Talking about bullish, this not just bullish but unusually bullish.
The same daily chart with annotations shows how the multi-year falling trendline (green falling line) was cleared in June, back-tested in August.
What’s important note, and very important in chart terms, is the double back-test of the critical 50% retracement level, see two yellow circles.
The game-changer on this chart occurred in August when 3 patterns ‘collided’, and price remained above all 3 of them (most recent yellow circle): the falling trendline was back-tested when it crossed the 50% retracement level but also the rising trendline. That was a very, very strong signal. Price is just 25% above that level now, so certainly not late to enter.
The 10-year chart, weekly timeframe, is ready to break out. The chart pattern we find here is that same W-reversal blended with a cup-and-handle, similar to the one on the daily. You might argue that this is obvious, but it really isn’t. The weekly not always confirms the daily, but when it does it’s really solid.
Once the current level is cleared, we see a 25% upside target first followed by a 100% target.
Members of Momentum Investing received some more detail on Friday in this stock alert: High Risk/Reward AI-Semis Stock >>