Descending Triangle on Intel Shares After Earnings Release

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Descending Triangle on Intel Shares After Earnings Release

Descending Triangle on Intel Shares After Earnings Release

Intel shares are looking weak after the company’s latest earnings release, which revealed job losses of 12,000. This restructuring will take place because of the shrinking personal computer market.

Intel reported that profit for the period ended in March rose 3% to $2.05 billion, or 42 cents a share, up from $1.99 billion, or 41 cents a share, a year earlier. Revenue rose 7% to $13.7 billion. The company reported first quarter per-share earnings of 54 cents and revenue of $13.8 billion. Analysts polled by Thomson Reuters expected per-share profit of 48 cents and revenue of $13.8 billion.

Intel shares have formed lower highs and found support around $31/share, creating a short-term descending triangle pattern. A break below support could allow the selloff to resume, possibly until the swing low at $28/share.

The 100 SMA appears to be crossing below the longer-term 200 SMA to show that the path of least resistance is to the downside. However, stochastic is pointing up so there’s a chance for more gains while RSI is on middle ground, barely providing any strong directional clues.

Price has found resistance near the 61.8% Fibonacci retracement level, which lines up with the neckline of a former double top pattern. These resistance areas could be strong enough to keep further gains in check, forcing Intel shares to resume the downtrend on weaker fundamentals.

The company lowered its 2016 guidance, projecting single-digit growth from its earlier estimates. Also, Intel expects second-quarter revenue of $13.5 billion, plus or minus $500 million. Analysts polled by Thomson Reuters expected revenue of $14.16 billion.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.