Supermicro shares saw a notable surge of over 16% on Tuesday, continuing an impressive rally that began after the company’s positive business update last week.
Supermicro Shares Rise Following Positive Business Update
The rise in Supermicro’s stock came after the server maker provided a strong revenue forecast for fiscal 2026, driven by increasing demand for artificial intelligence (AI) infrastructure. The rally has been fueled by continued buying interest, with shares seeing above-average volume. The stock broke out of a falling wedge pattern earlier this month, signaling further upward movement.
Investors have also been encouraged by the company’s announcement that it expects to submit its delayed fiscal 2024 financial reports by the February 25 deadline to avoid potential delisting from the Nasdaq exchange.
Stock Performance and Yearly Outlook
Since last week’s update, Supermicro shares have jumped 45%, closing at $55.80 on Tuesday. Despite this significant rise, the stock is still down by 30% over the past 12 months due to previous accounting and corporate governance concerns.
Technical Analysis: Identifying Key Price Levels
A closer look at Supermicro’s stock chart reveals important price levels that investors should monitor.
Breakout from Falling Wedge Signals Continuation
Earlier this month, Supermicro shares broke out from a falling wedge pattern, signaling a potential continuation of the upward trend. The stock has continued to gain momentum, with buying volume above average in recent sessions.
However, while the relative strength index (RSI) indicates bullish momentum (above the 70 threshold), it also suggests that the stock might be entering overbought territory, which could lead to short-term profit-taking.
Overhead Price Levels to Watch
Investors should be alert to two critical price levels above the current stock price:
$70 Level: Supermicro may face resistance near this level, which also aligns with a trendline drawn from the February pullback low and the April trough. This area represents a potential point for investors to take profits.
$96 Level: If the stock pushes past $70, the next key resistance point is around $96. This level corresponds to a series of peaks between February and July of the previous year.
Key Support Levels for Potential Pullbacks
For potential pullbacks, Supermicro’s price may find support at the following levels:
$50 Level: This is an important support area, where the stock could attract buying interest, near the early August swing low, October consolidation range, and early December peak.
$38 Level: If the stock falls further, the $38 level could act as significant support. This area aligns with a trendline connecting the September trough and similar price points from recent months.
Conclusion
Supermicro’s strong performance continues to capture investors’ attention. As the stock moves higher, it’s crucial to watch these key resistance and support levels to assess potential price movements. The stock’s breakout and strong volume suggest that the rally could continue, but caution is advised as the RSI indicates overbought conditions. Investors should monitor both upward and downward price levels for future opportunities.
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