Qualcomm Looks Ready to Break Out - Charts Show How to Trade It

The phone chipmaker Qualcomm is closing in on a key level and looks ready to break out. The charts show how to trade it.
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It’s been another spectacular year for big tech stocks, and Qualcomm (QCOM) - Get Report is no exception.

The phone-chip maker has seen total returns topping 71% in the trailing 12 months, putting it in league with recent momentum leaders like Apple  (AAPL) - Get Report, Microsoft  (MSFT) - Get Report and Snap  (SNAP) - Get Report over that time frame.

Qualcomm sits at the center of the push toward 5G, which investors are closely watching. In fact, the firm unveiled new 5G chips just this week. 

So no surprise that Qualcomm has the potential to keep that upside streak going in 2020.

The good news for the bulls is that the shares could be prepping for a big move sooner than expected. To figure out how to trade it here, we’re turning to the charts for a technical look at how Qualcomm’s breakout is shaping up.

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Last April Qualcomm surged when Broadcom  (AVGO) - Get Report said it planned to buy the tech giant. A month later the shares tumbled when a judge blocked the deal on antitrust concerns.

Since then, QCOM shares have traded in a well-defined range, catching a bid on every test of trendline support along the way.

Since November, the price trajectory in Qualcomm has shifted a bit. The shares have started forming a textbook example of an ascending triangle pattern, with horizontal resistance above the shares at $95 and the uptrend to the downside. 

This setup is typically a continuation pattern that clears the way to higher ground. For Qualcomm, that means investors should be on the lookout for a breakout above the $95 level.

Relative strength continues to be one of the most important indicators in investors’ toolboxes this winter. The consistent relative strength uptrend in Qualcomm signals that this tech name continues to systematically outperform the rest of the S&P 500, even now.

Despite the bullish setup in shares, risk management is still crucial here – prior swing lows just above $84 look like a logical place to park a protective stop. A meaningful violation of $84 means the price setup is busted and a correction becomes likely.

Meanwhile, Qualcomm looks ready to test $95 in the sessions ahead. From there, this stock’s lifetime high at $100 looks like an easy target for the bulls to take out.