Micron Stock Slides From Record High Amid China Business Fears – Watch These Key Price Levels

Shares of Micron Technology (MU) fell on Friday following a report that the company will suspend some of its work in China.

Reuters Micron will no longer supply server chips to data centers in China, it said on Friday, after the company suffered in the wake of a ban imposed by Chinese authorities on the use of the company’s products in critical infrastructure. The report said that Micron will continue to sell chips to customers in the automotive and mobile phone sectors in China.

Micron shares were down 2% at about $198 in recent trading, after rising more than 5% yesterday as Wall Street analysts offered a bullish comment on the stock. Analysts at UBS raised their price target on the stock to $245, noting that Micron should benefit from an “intensifying” shortage of memory and storage devices. Citi raised its target to $240 and said the company is well-positioned to collaborate with OpenAI, the maker of ChatGPT, which recently struck deals with Nvidia (NVDA), Advance Micro Devices (AMD), and Broadcom (AVGO).

As of midday Friday, Micron shares were up 135% year-to-date and were up 19% in October, as investors bet that growing demand for AI data center will fuel a boom in memory chips.

Below, we break down the technical details on Micron’s chart and point out key price levels that investors are likely to be watching.

Breakout pennant pattern

After rising above $200 for the first time earlier this month, Micron shares consolidated in a pennant formation before breaking out of the pattern on Thursday. Importantly, the move occurred on the highest trading volume in over three weeks, which could pave the way for a continued move to the upside.

While the RSI is near the overbought threshold, the indicator is still well below the June and September highs that preceded the consolidation periods, suggesting that the stock has plenty of room to continue the recent uptrend.

Let’s use technical analysis to predict where Micron’s price might go next, and also point out key support levels worth watching during pullbacks in the stock.

Potential upside price target

Investors can predict where Micron shares may be headed using bar pattern analysis, a technique that analyzes past trends to anticipate future trend movements.

When applying the analysis to a chip maker chart, we take the stock’s strong move to the upside that immediately preceded the flag and reposition it from Thursday’s breakout point near the pattern’s upper trend line.

This suggests that the stock price could quickly rise to around $245 if the sustained move continues.

Key support levels are worth watching

During pullbacks, investors should watch the $158 level initially. This area could offer support near a prominent swing high in June 2024 and a slight drop on the chart in September of this year after an impulsive move higher.

Finally, a larger decline could see Micron shares return to lower support near the key $130 level. Investors may look to set buy limit orders at this location near the top of the previous symmetrical triangle, which aligns closely with the major peaks on the chart in April 2024 and June of this year.

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As of the date of writing this article, the author does not own any of the securities mentioned above.