Supermicro Price Levels to Watch After Stock Surged Nearly 80% Last Week

Super Micro Computer (SMCI) shares gained ground in premarket trading on Monday after rising nearly 80% last week, as the embattled server maker rebounded from a turbulent stretch.

The recent gains follow the filing of a compliance plan last Monday to avoid a potential Nasdaq delisting, as well as a mention from partner and AI favorite Nvidia (NVDA) in the chipmaker’s earnings call on Wednesday.

Even after last week’s surge which saw the shares record their best five day return on record, the stock still trades more than 70% below its March peak. The stock had slumped in the wake of several accounting and corporate governance issues that, in part, led to the resignation of the company’s auditor and delayed filing of several financial reports.

The stock was up 7% at $35.50 in recent premarket trading.

Below, we take a closer look at Supermicro’s chart and use technical analysis to identify important price levels worth watching.

Potential Bear Trap

Supermicro shares broke down below support earlier this month before promptly reversing direction to reclaim the key technical level. Such a move creates a potential bear trap, a chart event that lures investors into selling or opening a short position before the market rebounds to cause a loss.

It’s also worth pointing out that above-average trading volume has backed the stock’s recent recovery, indicating strong buying conviction. Moreover, the relative strength index (RSI) has crossed above 50 to confirm improving momentum, but sits below overbought territory, giving the price ample room to test higher prices.

Looking ahead, let’s identify three important resistance areas on Supermicro’s chart to monitor if the stock continues its move higher and also call out an important support level to watch during retracements.

Important Resistance Areas to Monitor

Friday’s close above the lower trendline of a descending broadening formation could see momentum carry the stock’s price up to around $39. Investors may look for selling opportunities in this area near the September and October troughs, a region that closely aligns with the 50-day moving average.

The next higher level to watch sits near $50, a location on the chart that could encounter overhead resistance from the psychological round number, the early August trough and the upper range of a consolidation period that formed throughout October.

A more-bullish move higher may see the shares climb to the $64 level, about 93% above Friday’s closing price. This area on the chart could attract selling pressure around the August countertrend high and the descending broadening formation’s upper trendline, depending on the timing of the move.

Key Support Level to Watch

A retracement in Supermicro shares could lead to a retest of key support around $23. Investors may look for entry points at this location near a trendline that connects a series of consecutive swing lows that formed on the chart last year between August and October.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.