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Can Earnings Send Advanced Micro Devices to New Highs?

Business is humming for Advanced Micro Devices but the stock has been struggling for direction. Will earnings finally propel it higher? Let's look at the chart.

Advanced Micro Devices  (AMD) - Get Report has been struggling for direction over the last few months, although shares have been trading better over the past few days.

The stock rose 3.2% on Monday after gaining 4.7% on Friday. With earnings set for Tuesday after the stock market closes - amid a busy week for earnings - can AMD finally get the push it needs to new highs?

Check out TheStreet’s live blog of AMD's earnings on Tuesday after the close. 

There has been a huge shortage of semiconductors over the last few months, yet it’s expected that AMD has continued to do quite well.

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It’s clear that Intel  (INTC) - Get Report is struggling against AMD and Nvidia  (NVDA) - Get Report, the latter of which recently had an impressive rally to new highs after its GTC conference.

Bulls are optimistic that AMD is also enjoying a solid quarter, indicative of the rally over the last few days. However, we’ll need more than that if we’re going to see a move to new all-time highs.

AMD and Nvidia are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMD or NVDA? Learn more now.

Trading AMD

Daily chart of AMD stock.

Daily chart of AMD stock.

It’s not rare for AMD stock to trade within a range for several months or even several quarters, then eventually burst higher. For a while, the stock was stuck between $74 and $88, eventually breaking out over resistance in December.

Shares ran to $99.12 before topping out and retreating. For a while, prior resistance acted as support, with the stock bouncing from $88.

However, that level eventually failed as tech stocks were under heavy selling pressure. For prudent observers though, they’ll notice that prior range support again held firm, as AMD bottomed near $74.

Back around $86 now and the company’s earnings report is likely a make-or-break catalyst in terms of the current range.

AMD stock is now back above all of its major moving averages, with the exception of the 100-day moving average, which is near range resistance.

On a bullish reaction, we need to see a close above the $87.50 to $88 area. Even better would be a close above $90 and the 61.8% retracement.

A gap-up into this area that fades back below $87 is not constructive, as it only further cements AMD into the current trading range.

However, a move over $90 opens the door back up toward the current high near $99, then $100-plus. That’s what I’m looking for after AMD reports earnings.

On the downside, look for a decline to the 50-week moving average. While this measure has been support, a close below it puts range support near $74 back in play.