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AMD Shares Face Continued Pressure Amid AI Export Regulations

Advanced Micro Devices (AMD) experienced another decline on Thursday, following a broader sector sell-off triggered by the announcement of new U.S. licensing requirements concerning AI chip exports to China. This development has raised significant concerns among investors, contributing to heightened volatility in AMD’s stock price.

In a recent regulatory filing, AMD disclosed that it could incur charges up to $800 million related to the export of its MI308 graphics processing unit (GPU), which is intended for high-demand applications like artificial intelligence and gaming.

Since the beginning of the year, AMD shares have plummeted by 28%, with a staggering 43% decline over the past year. This downturn reflects investor anxiety surrounding a slowdown in AI infrastructure investment and AMD’s struggles to increase its market share against industry leader Nvidia (NVDA). Additionally, the complexities introduced by previous trade policies from the Trump administration have compounded the uncertainty surrounding the company’s stock performance.

Technical Analysis: Potential Signs of Reversal

A closer look at AMD’s recent trading patterns reveals a piercing candlestick formation, which typically indicates a possible reversal from a downward trajectory to an upward one. This pattern emerged after a significant drop below the neckline of a head and shoulders formation observed back in December. Following a rebound fueled by increased trading volume last week, the stock appears to be setting the stage for a potential long-term turnaround.

Despite this glimmer of hope, selling pressure resumed this week, with the relative strength index (RSI) moving towards oversold territory, indicating a continuation of bearish momentum in the short term. Investors should remain vigilant for the RSI’s potential breakout from a falling wedge pattern that has developed over the past several months.

Key Support Levels for Investors

On Thursday, AMD stock closed at $87.50, reflecting a 0.9% drop. Observing the chart, the first critical support level stands around $76, a price point that aligns closely with the previous week’s low and exhibits a history of trading activity dating back to September 2020.

If the stock breaches this support level, it could lead to a reevaluation at the lower support level of $65. This area might present a buying opportunity for investors, especially considering it corresponds with the December 2022 retracement low, noted as the launch point for a significant 14-month uptrend in AMD’s stock history.

Resistance Levels to Monitor

Should AMD shares begin to rise, the immediate resistance to watch is around $116. This level is characterized by significant selling pressure, coinciding with the 200-week moving average, last month’s countertrend high, and numerous price action points extending back to August 2021.

A confirmed longer-term trend reversal could accelerate a rally towards $150. This area is historically relevant, as it marks a horizontal line connecting various minor peaks observed between December 2021 and August of last year. Investors who have capitalized on the recent downturn may consider this level for potential profit-taking, albeit while being cautious of resistance posed from the head and shoulders’ neckline as well.

The insights provided here are for informational purposes only and do not constitute investment advice. It is recommended that investors perform their own research and analysis before making any investment decisions.

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