SMCI: Pay close attention to these key points.Since our last analysis, SMCI has lost its main support points, and is now in a strong downtrend, without much hope of reversing.
On the daily chart, the stock has seen a sharp drop from the highs above $640, the previous top, and the price is currently hovering around $420. This represents a major decline, reflecting a downward trend that intensified after breaking through key support levels, such as $478.56. The 21-day EMA, which acted as a dynamic resistance, has been consistently pointing downward, confirming the prevailing bearish sentiment. The next key support is near $395.18, where the price is currently consolidating. If it breaks below this level, it could quickly move toward the next significant support around $357.00, as indicated on the weekly chart.
The weekly chart echoes this bearish momentum. After peaking around $1,200, SMCI has faced a severe sell-off, with the 21-week EMA indicating the continuation of the decline. The $357.00 level, which coincides with a previous resistance-turned-support from earlier in 2023, stands out as a crucial area to watch. If the price continues to slide, this level may provide the next line of defense. Failing to hold there could result in further losses, potentially targeting lower price regions.
At this stage, we should monitor the reaction around $395 and $357 levels, as these will likely dictate whether the stock can stabilize or whether the downtrend will accelerate. Holding these levels might create an opportunity for a rebound, but the bearish pressure is still strong. A bullish reaction could materialize if SMCI's price breaks the $478 area again, suggesting a bounce to the $640 or the 21-week EMA.
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Remember, real trading is reactive, not predictive, so let's stay focused on the key points described above and only trade when there is confirmation.
“To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate.” — Jesse Lauriston Livermore
All the best,
Nathan.
