Himax Technologies (HIMX) is a semiconductor company. This article, like the previous one for Rollins Inc. (ROL), were from requests.

You can access the official website for Himax Technologies (HIMX) here. From HIMX’s website:

Himax is the leading provider of semiconductor solutions dedicated to display imaging processing for consumer electronics brands worldwide. We Believe that our globally recognized design and engineering expertise, combined with our focus on customer service and close relationships with semiconductor manufacturing service providers, has contributed to our success.

Himax Technologies (HIMX) – 20 Year Chart

Since HIMX is a new company being covered, I always like to look big first. This first chart for Himax Technologies (HIMX) is a 20 year monthly candlestick chart.

Even though this is a 20 year chart, charting history begins in March 2006 – 11 years ago. This must be when HIMX became a public company.

On the chart, I placed a Fibonacci Retracement Tool to measure HIMX’s current correction. It’s already broke below the 61.8% Retracement Line. I then placed a Fibonacci Extension Tool on the current downtrend to calculate probable support areas. That would be the red 161.8% Target Line. The red 161.8% Target Line currently sits around the $3.29 area.

Analyzing a 20 Year Candlestick Chart for Himax Technologies (HIMX)

HIMX has seen increasing selling volume on its chart over the last year, which is confirmed by the MACD Histogram that is showing selling momentum that is still increasing. However, the rate of the increase seems to be slowing.

A reversal in the share price is typically not seen until a[s2If !current_user_can(access_s2member_level1)]….

If you want to continue reading this article for Himax Technologies (HIMX), you must first login. I discuss areas and strategies to use to scale into a long position for HIMX.

If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)] decrease in selling momentum occurs. The decrease in selling momentum may be detected earlier by monitoring the weekly and daily charts for bullish reversal items and then confirming them on the monthly chart.

But the above monthly MACD Histogram that still shows increasing selling momentum should keep any new purchases sidelined for the time being. The bottom does not appear to be in yet.

HIMX – Downside Risk Calculations

This 3 year weekly candlestick chart has the original Fibonacci Extension Tool I placed on the above monthly chart. I then also placed another Fibonacci Extension Tool (the black one) on this current downtrend. Take a look at the chart then I will discuss the tools.

Calculating Support Areas During the Current Pullback for Himax Technologies (HIMX) on a 3 Year Weekly Candlestick Chart

There seems to be support around the $4.75 – $5 area. A bounce from this area could take HIMX’s share price back towards the $6 area and slightly above. This, in my opinion, would only be an opportunity to sell into strength and reduce risk for another push down. At a minimum, a re-test of the bottom it sets.

The positive note on this weekly chart is that the selling momentum is starting to decrease. However this decrease in selling momentum is actually happening while the total selling volume is actually increasing over the last 4 weeks. This typically represents buyers starting to step in and purchase shares during the downtrend, possibly starting to establish a position.

Without a capitulating volume spike to reverse the current downtrend, the risk for a continued bullish reversal is statistically minimal. I would be reluctant to invest my cash in the stock at the current moment.

HIMX – Bearish Impulse Wave

Just about every corrective Elliott wave pattern ends with a violent Wave C of some sort. Wave C’s are typically made up of a Bearish Impulse wave pattern.

The Fibonacci Extension Tools on this chart help to estimate the bottom of Wave C’s.

On this 1 year daily chart, I illustrated a possible Bearish Impulse wave pattern and how it would most likely continue to develop over the short-term.

Analyzing a Potential Bearish Impulse Wave Pattern for Himax Technologies (HIMX) on this 1 Year Daily Candlestick Chart

Any run-up before earnings should be used to trim positions, not enter new ones. At least, not at the current moment.

Himax Technologies (HIMX) – Summary

Himax Technologies (HIMX) is in the midst of a downtrend. Wait for a capitulating volume spike before considering new purchases for this stock. Capitulating volume spikes typically happen on earnings or some type of news event. For the length of time that HIMX has spent in a downtrend, I would not feel comfortable going long the shares until one developed.

A possible short-term trade back up to the $6 and slightly higher may present itself from the current earnings report. However, if earnings disappoint, I anticipate the $4.75 support area will break and the last leg down towards the 161.8% Target Lines would be in action. If you are simply trading shares, I would not hold shares through the upcoming earnings report.

The 161.8% Target Lines calculated by Fibonacci Extension Tools during downtrends are less risky areas to go long. Remember, to confirm any possible reversal with a bullish reversal candlestick pattern of some sort.

Another method that confirms the reversal would provide even more confidence that the reversal has started. One such thing would be waiting for HIMX’s Golden Cross moving average pattern to develop.

Remember that it is best for a stock to show some other indicators before investing capital and trying to hit the absolute bottom in a downtrend. I would rather let the stock settle down, prove it is in a new uptrend and be deserving of my capital. Right now, Himax Technologies HIMX should be on your watchlist, not in your portfolio. At least not yet, not until some forms of a bullish reversal have taken place. Those indicators are not yet visible.

Good luck trading!