What you need to know
- Micron’s shares fell sharply in Wednesday extended trading after Nvidia, a memory chip manufacturer and Micron partner, issued a weaker than expected outlook for the current quarter.
- On Thursday, the stock is likely to make a dramatic break below its trading range. The potential for more earnings-driven sales will increase.
- Investors should monitor key price levels on Micron's chart around $85, $78, and $72, while also watching an important overhead area near $97.
Micron Technology shares (MU) fell sharply in Wednesday’s extended trading after Nvidia, a partner of Micron Technology and a memory chip manufacturer (NVDA), issued softer-than-expected outlooks for the current quarter.
The Idaho-based firm said that it expects the consumer markets to be weaker than expected in the short term, even though it believes the growth will return in the second quarter of the fiscal year 2025. Executives attributed the low outlook in prepared remarks to a slower than expected PC upgrade cycle, as well as softer industrial and auto markets.
Micron shares declined 16%, to $87.80 in extended trading. Prior to the after-hours drop, the stock had gained 22% since the start of the year, placing their performance roughly in line with the S&P 500’s 23% return over the same period.
Here we will analyze Micron’s technicals, and identify important levels of price after the earnings announcement that investors might be looking at.
Trading Ranges Breakdown
Since late September, Micron’s shares have been oscillating between 50-day and 200-day Moving Averages (MAs), indicating that the stock has no clear direction.
The price has recently been under significant pressure due to the fact that it is nearing the 200-day MA, and the quarterly report of the chipmaker. The drop today occurred at the height of trading volumes since the start rangebound, indicating that large market participants are positioned for volatility after earnings.
In fact, it appears that the stock will stage a definitive breakdown below the range of trading on Thursday. That could increase the likelihood for more earnings-driven sales.
We’ll identify key support levels and also a crucial overhead area that you should watch when the countertrend rally is taking place.
Monitoring Key Support Levels
Around $85, the first level below which to keep an eye is important. This area may be a good place to find some support for the shares. It is near a line that connects comparable prices from December 2023 until February, with swing lows on the chart that were formed in August and Septembre.
In the event that the share price falls below $78 due to a failure to maintain this important technical position, the stock could fall to $78. Investors could look for buying opportunities near the narrow period of consolidation located just below November 2023’s swing high.
Sell below this level and you could see a return to the lower support at $72. This is an area of the chart that would likely attract buying interest, near the July 2023 peak as well as the September 2023 peak. These are both close to the December 2018 trough.
Important area to watch during Countertrend Rallies
Investors should be on the lookout for $97 if Micron shares are in a contratrend rally. The chart area could offer overhead resistance at the lower trendline of the trading range and at several price levels that were similar to those before the breakaway gap in March.
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According to the article, as of its date of publication, the author did not possess any of these securities.
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