I'm off today and have a little free time so here's my take on AMD, why I entered and why I will be patient with it as long as it doesn't break and stay below 50. A flash on 50 would give me the opportunity to potentially double down for a quick bounce sell back to 52-54 to lower my position cost basis down to 50-52.
Weekly chart back to 2016. It has stayed on a clear trend up with quick rises where it breaks out and doubles and then goes sideways for a while. It was going to 75 before Covid hit and reset every technical for just about every stock out there. This sideways step with cup and handle has now given it room to 100 magnet with double from 50 this time. My target will be 80-100 if it breaks out to 60+. When these multi year trends set up, it is critical to buy with confidence when the bottom trend line is touched and sell with confidence when the upper trend line is touched. It's at a bit of a crossroads right now being exactly mid channel. I think it's pretty binary from here. It either explodes to double (see 2016 & 2018) or it drifts sideways range bound ~40-50 until it eventually hits the lower trend line (see 2017 into early 2018) On longer term charts, I like weekly or monthly on log scale:
Daily chart. It had a clear rising wedge that got tight with support around 54 which was confirmed by a tight hourly channel. That's why I entered. That rising wedge was broken to the downside and now a Darvas box is in play in purple. Bottom purple line is 51 with the flash down support level in yellow at 50. Look how it handled 51 yesterday (hourly chart next will show this better). It is clear that if 50 is lost, it will likely go sideways for longer before it has a chance of breaking to the upside. That could be a while. So if 50 is clearly lost, I sit tight and wait for a bounce back to 50 to sell out and take my ~7.5% loss. I would be ok with that in the long run because risking 7.5% is well worth the risk of a target 50-100% gain. If you do this enough times, you don't even have to bat anywhere close to .500 to win bigly in the long run. Hell you don't even have to bat .300 to outperform the market (no offense to you buy and forget index fund investors; this isn't for everyone and takes a lot of time and effort).
Almost every time a level like 50 (notice the big round number) is clearly broken, it will reverse back test it before drifting lower. There are traders out there who prey on stop loss raids and play the bounce back for a nice quick profit. So that's why I don't set a stop loss at 49 or 48 or 47. It could collapse fast, flash down to 47 and whip back to 50. That's when you get out. Note that if I play a $2-4 double down to lower cost basis down near 50 before it is broken, I basically get away with a failed trade with minimal or no loss.
Hourly chart. Look at all those channels. See how 54 set up as major support for several days? If macro would have carried on without the big dip a couple days ago, this would have likely broken up instead of down. 54 would have become 56 which would have become 57.50 quick and knocking on the door of a major breakout. 54 would have been the perfect entry.
This might be too many words so feel free to TLDR me but it summarizes how I approach the longer term trades. Long term weekly/monthly trends, daily set ups, hourly for entries. One good thing about hourly is that it filters the noise out that you see in 1 and 5 minute charts. Those shorter term charts can be useful though when entering and exiting to get a little better prices, but that's another discussion. On longer term trades like this, it's not about nailing entries perfectly. It's about patience, confident entries & exits, knowing the trends & levels and never panic selling.
