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Stock Selection (US shares): Micron Technology sees further potential downside

Micron Technology (MU)



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Key technical elements

  • Micron Technology, a key U.S. semiconductor component stock in the leading PHLX Semiconductor stock. In addition, its 51% of its global revenue is derived from the China market where the on-going heightened trade tensions between U.S. and China can cause adverse effects to its future profits after the U.S. administration’s proposal to impose additional tariff hikes on Chinese imports this coming Fri.
  • The recent medium-term uptrend from its 26 Dec 2018 low of 28.39 has been damaged through the bearish breakdown from of a key ascending trendline support on 26 Apr 2019
  • Medium-term momentum has turned negative as the daily RSI oscillator has staged a bearish breakdown below a significant corresponding ascending support at the 50 level and still has further room to manoeuvre to the downside before it reaches an extreme oversold level of 20
  • The next significant medium-term supports rest at 36.60 and 32.75 (76.4% Fibonacci retracement of the entire up move from 26 Dec 2018 low to 03 Apr 2019 high & the primary ascending trendline support from May 2016 low)
  • Relative strength analysis from the ratio of Micron Technology against its PHLX Semiconductor sector ETF (SOXX) has continued to exhibit medium-term weakness/underperformance.

Key Levels (1 to 3 weeks)

Intermediate resistance: 41.50

Pivot (key resistance): 45.30

Supports: 36.60 & 32.75

Next resistance: 51.48/53.68

Conclusion

If the 45.30 key medium-term pivotal resistance is not surpassed, Micron Technology is likely to shape a potential multi-week down move to target the next supports at 36.60 and 32.75.

However, a daily close above 45.30 invalidates the bearish scenario for a continuation of the impulsive up move towards the next resistance at 51.48/53.68 (close to 61.8% Fibonacci retracement of the 6-month sell-off from 30 May 2018 high to 26 Dec 2018 low & 30 Aug 2018 swing high).

Charts are from eSignal 

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