Chart Of The Day: Micron Technology Green Fundamentals Don't Match Red Technicals
Investing.com | Mar 23, 2022 09:53AM ET
On Tuesday, utility provider Idaho Power Green Bond Framework , reflecting the company's plan to "embrace green financing as a principal funding strategy." Two weeks later the company issued its inaugural $1 billion bond offering.
That lean toward the green will likely also be visible when Micron reports their fiscal Q2 2022 results on Tuesday, Mar. 29 after the close. EPS is expected to come in $1.98, more than double last year's earnings per share for the same quarter. Revenues are also expected to come in higher, at $7.53 billion versus $6.19 billion for the corresponding quarter last year.
Micron's greener outlook, amid the current energy and commodity disruption worldwide because of the Russian invasion of Ukraine which has resulted in sanctions, and a potential embargo on Russian oil, should make the company's stock a prime ESG choice for many environmentally conscious investors.
But Micron's greener outlook may not be in play for its technical chart.
On MU's daily chart, for the third day in a row the price has been suppressed by the 200 DMA, around the levels of its previous low, registered on Jan. 28.
The 200 DMA may also act as a natural neckline to a double top, hampering the price's ability to overcome the $80 level, since the 200 DMA is keeping it at bay. This could also be evidence that the previous rally was nothing more than a "return move" to retest the double top.
That is, if the pattern is indeed a double top. Looking at the stock's activity from a broader perspective, should the price follow the course of its momentum, it will complete a much larger double top in play since April.
Notice that on the weekly chart the 50 WMA defines the daily double top. The price dipped below the uptrend line since the March 2020 bottom and bounced back above it. Meanwhile, the price found support at the 100 WMA, which will have to be breached before bears can hope to top out the stock.
Both momentum and price average-based indicators are bearish. As the current price weakened, the MACD's short MA crossed below the long MA, then attempted to cross back over the long MA and failed, reconfirming that resistance.
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As well, both the RSI and the ROC are within falling channels.
The monthly perspective, going back to 1996, indicates that the double top will have occurred around the $97 level, where MU hit an all-time closing high on Jan.14, 2022, the same point where the stock hit its previous all-time high, which occurred during the Dotcom bubble.
h2 Trading Strategies/h2Conservative traders should only buy upon a new high above the Jan. 5 closing of $94.40, or short after the price falls below $65.
Moderate traders could buy upon a close above the 200 DMA and a return move to retest its support or sell below $76 and a return move to retest resistance.
Aggressive traders would sell, counting on the repeated resistance of the 200 DMA, and the completion of the daily double top.
Trade Sample - Aggressive Short
- Entry: $80
- Stop-Loss: $82
- Risk: $2
- Target: $70
- Reward: $10
- Risk-Reward Ratio: 1:5
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