Fuelled by an AI-theme-driven rally Advanced Micro Devices, Inc. (NASDAQ: AMD)’s stock more than doubled between November 2023 and early March this year, making an all-time high of $227.4. However, the stock has quickly retraced and given most of those gains as it now trades near the $160-170 zone.

To understand why the $160-170 zone is so important for AMD, one will have to zoom out and look at its long-term charts. Once we open AMD’s weekly charts and see the stock’s movement since 2018, the significance of $160-$170 level becomes apparent.

AMD’s stock has had a massive run-up from mid-2018 until March this year that has taken the stock from $8.5 to close to $230, which is highlighted by the bullish trendline 1.

AMD chart by TradingView

During this run-up the stock experienced a correction in the middle that took it down from a high of above $165 all the way down to $55, highlighted by the bearish trendline. When this correction finally ended in October 2022, the stock started its current upward journey highlighted by bullish trendline 2.

Though it did face some hiccups during the second bull run once it breached above $160, it hasn’t fallen below it since then despite retracing many times, which explains why $160-$170 is so important for the stock.

We are at a critical support zone now, which means either the stock would take support here and move up or it would break below the support zone and fall further. The play here is simple for both AMD bulls and bears.

AMD chart by TradingView

For bulls if the stock doesn’t break below conclusively, i.e., closes below it on the daily charts, they can expect the stock to move upward in the days to come. For investors looking to buy AMD, this is probably a golden opportunity because they can buy the stock at current levels and keep a stop loss a few cents below $160.

For investors who are bearish on the stock, unless it breaks below $160 they shouldn’t expect further downside. Bears who want to short stock should do the opposite of what investors who are already long the stock do, which is waiting for $160 to break conclusively.

If the stock doesn’t fall below $160, expect first resistance near $189. If it does, it can fall all the way down to $128, which is the next support.

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