Ever since their steep ascent in the first half of summer, shares of microprocessor manufacturer Intel (INTC) have settled into a multimonth consolidation phase that increasingly looks ready to release the stock higher. Today, we’ll show you where on Intel’s stock charts that you should keep your eye.
Last week, Micron Technology (MU) reported better-than-expected earnings, leading Intel stock to rally back to its year-to-date highs, and it also flirted with a break to higher highs. This also helped INTC hold support as it reversed off the intraday lows, leaving behind a bullish reversal candle Friday.
On Monday, Bank of America raised its price target for INTC from $36 up to $43, which led Intel stock to rally, thus completing a two-day bullish reversal move.
Intel Stock Charts
Looking at INTC through the lens of a monthly chart that stretches all the way back to the late 1990s, note that after the pop-‘n’-drop period from 1998-2001, Intel stock settled into a decade-long bottoming period from which it has only recently begun to recover. The rally over the past 12 months or so has lifted INTC back to the lower highs from 2001 and 2003, below which it is now coiling up.
Considering how long this horizontal line has served as resistance, it would be unrealistic to expect an immediate break above it. Rather, at the least, a consolidation period of several weeks to several months is necessary for Intel stock to regroup and eventually push higher. Meanwhile, the relative strength index continues to trend higher (i.e., it’s not showing any negative divergences), which is to say that the multimonth trend should resume higher, possibly into year-end.
The question as far as these things go is always one of timing.
While the above long-term chart of Intel stock is bullishly positioned, until INTC actually does break higher, it is by definition stuck in a consolidation phase below resistance.
On the daily chart below, note that the most bullish action this year has been the two breakaway gaps from June and July. Neither of them were “filled” or fully retraced, which speaks to the strength of the underlying trend. After the July gap up, INTC began to take a breather, but rather than pushing it much lower, the price action has been mostly sideways.
The aforementioned bullish reversal from last Friday and this Monday has again pushed the stock toward the upper end of this multimonth consolidation range.
Active investors and traders could now circle the $35.30 area, as a daily close above there could send Intel stock toward the $38 area.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
