technical analysis INTC

Technical analysis of INTC

INTC, the representative CFD based on Intel Corp’s shares, has continued to make gains over the last few months. Ongoing shortages of midrange chips and work-from-home demand have generated strong headwinds for chipmakers since this time last year. This technical analysis of INTC looks at the daily chart ahead of the company’s earnings report after hours tonight.

Intel’s earnings per share (‘EPS’) beat estimates at least slightly for every quarter of 2020, with Q4’s EPS of $1.52 a relatively strong result. Intel’s actual ratio of price to earnings (‘PE’) for 2020 was 12, making it pretty unique among big tech as an undervalued share by this measure. PE is expected to increase negligibly to about 13 this year.

Back on the chart, the clear resistance is the area of the latest high around $68 which coincides with the 100% weekly Fibonacci retracement area. Support is less obvious but might occur around the psychological area of $50 which was previously a resistance in the first half of December 2020.

Technical indicators on INTC D1

 

Moving averages give a strong buy signal, with each of the 50, 100 and 200 SMAs successively above slower lines and below the price. The 50 and 100 SMAs golden crossed the 200 in February and March respectively. So far, the test of the 50 SMA from Bands to the downside has been unsuccessful, but the 100 SMA seems to be the main support in view from moving averages after tonight’s release.

There is no signal of saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5) although the latter at about 22 is very close to the trigger zone for oversold. Several spikes in the daily volume of buying over the last couple of months might suggest positive sentiment.

Price action and Fibonacci

 

The pullback from the latest high has formed a weakly defined descending channel, with this evening’s earnings a clear candidate for catalysing an upward breakout. Yesterday’s upward engulfing candle is a strong buy signal in the context.

However, the 100% weekly Fibonacci retracement area – full retracement of all of March 2020’s losses – is usually a very strong area. It might be a challenge for price to break clearly past this in the immediate future. Either of the 38.2% and 50% areas of the daily Fibonacci fan might function as a trendline over the next few weeks unless the results later are particularly negative.

Technical analysis of INTC: summary

 

Intel Corp is expected to release its earnings report for the first quarter of 2021 today, 22 April, after hours. The consensus EPS at the time of writing is $1.15, with the 13 estimates ranging from $1.12 to $1.25. 11 of the estimates have been revised upward within the last four weeks.

Overall the technical picture for INTC remains very positive, and based on a cursory glance at fundamentals there certainly could be room for a retest of the latest high in the near future. As with any earnings report, though, volatility in the short term is likely to be high and markets might not behave in the way many participants expect.

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