Intel Corporation (NASDAQ: INTC) has taken its shareholders on quite a ride in 2015. After beginning the year at around $36, its highest price since the Dot Com Bubble, the stock plummeted more than 27 percent down to $24.70 during August’s flash crash. The stock then bounced back to close the year down only 5.7 percent.
After such wild trading action, traders are looking to the charts for technical signs of what could be in store for Intel in 2016. Here’s a breakdown of key levels to watch.
The first notable technical development in Intel’s charts since it’s 2015 lows in August is the breakdown of a potential bearish head and shoulders pattern that had formed throughout late 2014 and early 2015 seen in the chart below.
The head and shoulders formation is a notoriously bearish technical signal that a stock may have topped, but the breakdown of the pattern in Intel’s chart in late 2015 was a positive sign for the future.
In terms of resistance, the two key resistance lines to watch in the near-term are the positive-sloping line that has served as resistance since early 2015 and the horizontal line at the $37 level that served as resistance in late 2014 and represents the post-Dot Com high for Intel. In the stock can break out above these levels, there looks to be mostly blue sky above.
If the stock again takes a downward turn after without breaching the $37 level, it could be a further indication that Intel will remain within a trading range for the foreseeable future.
In terms of support, it’s not surprising to see that the $34 level, which represents the peak of both shoulders of the head and shoulders pattern, has provided short-term support for Intel in recent weeks. In addition to $34 being shoulder-level support, it is also the current level of the 50-day simple moving average, which served as support in September, November and December.
A breakdown below $34 would likely mean that Intel is headed down to retest the $29 level that served as support in October 2014 and March 2015 and resistance later in the year. Finally, the last line of defense in the event of a technical breakdown would be the 2015 flash crash low of $25.
Intel’s short-term technical outlook is somewhat unclear for now, but traders should be watching for a breakdown below $34 as a bearish signal and a breakout above $37 as a bullish signal. If 2015 is any indication, Intel shareholders could be in for a wild ride in 2016 one way or another.
Disclosure: the author has no position in the stocks mentioned.
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