The semiconductor industry and stock sector has been very hot the last 2 years. Advanced Micro Devices (AMD) is up over 600% in that time period. nVidia Corporation (NVDA) has returns exceeding 700% and Micron Technologies (MU), who seems to be the laggard at a 290% return. This update

I was browsing some investment websites this morning reading up on this hot sector. As I was looking for some possible ways to continue to play this hot stock sector, I came across this article from Investors Business Daily.

“ASML’s New Machines Could Change The Future Of Chipmaking”

This Netherlands-based company produces photolithography machines that can print microscopic features on chips. According to the article, these microscopic features will enable Moore’s Law to continue, where the number of chips increase and cost goes down every 18 to 24 months.

This company could offer a long-term play on a hot sector. If you haven’t read the linked article above, I strongly suggest doing so before continuing. I’ll wait…..

A company that has a nice backlog of sales with the probability of acceleration in delivery seems to be a nice backstory for the fundamentals. A strong fundamental story is needed to help out the technical story. So let’s review some ASML Holdings (ASML) stock charts and see how their technical story is shaping up!

ASML Holdings (ASML) website can be accessed here.

ASML Holdings (ASML)

This first chart for ASML Holdings (ASML) is a 10 year weekly candlestick chart. I’ve placed a Fibonacci Extension Tool at the beginning of an uptrend that began in November 2008. Kind of interesting that this stock bottomed out 4 months earlier than most stocks in March 2009 when this bull market rally began.

The Long-Term Golden Ratio is the Black 161.8% Target Line, or $241.40

There is a confluence of Target Lines from the 3 different Fibonacci Extension Tools I overlaid on the chart. The confluence area is broken down as follows[s2If !current_user_can(access_s2member_level1)]……

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I calculate some long-term price objectives for the company

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- 100% Target Line from the black Fibonacci Extension Tool that covers a long-term uptrend
- 261.8% Target Line from the green Fibonacci Extension Tool that covers ASML’s 2 year uptrend
- 161.8% Target Line from the blue Fibonacci Extension Tool that covers the most recent 1 year uptrend

The confluence area is the $180 – $188 price area which is identified by the gray shaded box. This confluence area should provide resistance to the powerful uptrend at hand. That resistance area and anticipated pullback/consolidation that follows could be an opportunity to jump in on the uptrend for the long haul.

Let’s look at some different levels of support areas for any pullback from the $180 – $188 area. These support areas could also be used as scale-in purchase areas.

ASML – Support Areas

This next chart is a 5 year weekly candlestick chart for the company. It has a series of trendlines for each of its major uptrends.

Analyzing Support Areas for ASML Holdings (ASML) Using Trendlines

Sometimes an aggressive entry is needed for a hot stock. The $150 – $160 area looks like the best area to start a long-term scale-in process. The next trip to this area could be used as a scale-in opportunity.

The $160 is where the stock’s share price pulled back to early last week. That pullback area could be used again as a buy-in spot. Usually the hardest part for any trade is patience in waiting for a buy-in opportunity.

ASML – Point & Figure

A Point & Figure chart can help to confirm your analysis from other methods, or it can also be used as a starting point. I like to use it as a confirmation tool since I am proficient with the Fibonacci Tools.

The High/Low P&F Chart reflects a bullish price objective of $182.

A High/Low P&F Chart Reflects a Bullish Price Objective of $182

The price objective for the Closing P&F Chart is very similar to the High/Low P&F Chart. The Closing P&F Chart has a bullish price objective of $180.

Both of these price targets seem to agree with the probable resistance area of $180 – $188 identified above by the confluence area of Target Lines from the Fibonacci Extension Tools.

ASML Holdings (ASML) – Summary

If the ASML Holdings (ASML) stock charts look intriguing to you, consider starting the scale-in process in the $150 – $160 support area.

Be certain to ask for an update on ASML Holdings (ASML) if you do decide to invest/trade in the company. I will be certain to get out an updated group of ASML Holdings (ASML) stock charts at that time.

Sometimes a stock’s story can play out over a several year period. ASML Holdings (ASML) stock story seems to have that potential. Good luck trading!

On Deck: NASDAQ & the FANG Stocks

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