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Last week Intel (INTC) - Get Intel Corporation Report suffered a massive breakdown. The stock fell nearly 6% on extremely heavy trade after opening the session with an earnings-inspired breakdown gap. This was a very damaging reversal from the fairly bullish action the day before.

Investors showed a great deal of confidence ahead of earnings as they aggressively bid for shares. In the end, this will lead to a deeper pullback.

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Since the Oct. 19 collapse INTC has been trading in a narrow range near the $35 area. This is likely just a pause before a new leg lower begins. In the near term patient Intel investors should remain on the sidelines until the dust clears.

A key level to focus on is the $34 area. This is Intel's January peak. Back in July, after INTC took a dive after its July 21 earnings report, the stock held this level. Two weeks later this key level was tested again and held. From that point, the Aug. 3 low, INTC began a powerful bull run that eventually carried shares over 12% higher.

If INTC can once again hold the $34 area, further downside will be limited. Considering other negative developments since the October peak, namely a monthly key downside reversal, a base here would be very impressive. Investors should keep a close eye on this area.

With overhead pressure continuing to build, a clean break of the August low, which also marks the 1/3 retracement of the stock's 2016 range, could open the door to a much deeper sell \off.

This article is commentary by an independent contributor. At the time of publication, the author was long INTC.