Don't Ignore This Chart!

Micron Fails at Break Zone


A basic concept of technical analysis is that broken support turns into future resistance. This concept is proving true for Micron (MU) as it returned to broken support in April and backed off the last two weeks.

The chart shows MU breaking down with a support break in September and further weakness into late December. The stock recorded a 52-week low near 30 in late December and then rebounded to the 45 area by April. Even though a 50% advance off the lows is impressive, it retraced less than 50% of the prior decline and met resistance near broken support (blue zone). Also notice that the falling 200-day resides in the low 40s. The bigger picture is still bearish.

Micron stalled in the 43-45 area in April and then turned lower the last two weeks with a break below the April lows. This support break reverses the counter trend advance and signals a continuation of the prior decline. Also notice that the support break occurred with an increase in volume.

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Senior Technical Analyst,
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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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