Arm’s Ascending Trendlines
Shares in British semiconductor and software design company, Arm Holdings (ARM: NASDAQ) have rallied more than 80% in less than three months. Let's delve into the details behind this impressive surge...
Mapping the Trendline Fan
Arm’s rally from its mid-April lows can be characterised by a series of higher swing lows. Mapping these swing lows without cutting through any prices creates an ascending trendline fan. This fan is useful for several reasons:
Bullish Momentum: Each steeper line shows that buyers are stepping in more aggressively, providing a clear indication of increasing momentum.
Dynamic Support: The trendlines offer dynamic levels of support from which trend continuation traders can time buying pullbacks.
Exponential Exhaustion: Progressively steeper trendlines signal an exponential nature to the share price rally, which is rarely sustainable.
Combine With Structure and Indicators: Combining the ascending trendline fan with key horizontal levels and the RSI indicator reveals that Arm’s exponential rally took prices into overbought territory on the RSI. This coincided with prices retesting a key level of resistance, and we have subsequently seen Arm’s rally stall in recent sessions.
ARM Daily Candle Chart
Past performance is not a reliable indicator of future results
Identifying Key Inflection Points
On the hourly candle, recent price action has formed opposing pin-bar candles, creating two key inflection points that can be used as trigger points for short-term traders.
A break above the upper trigger point could signal a new phase of Arm’s uptrend, while a break below the lower trigger point could see a deeper retracement back towards the lower ascending trendlines.
ARM Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.84% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Mapping the Trendline Fan
Arm’s rally from its mid-April lows can be characterised by a series of higher swing lows. Mapping these swing lows without cutting through any prices creates an ascending trendline fan. This fan is useful for several reasons:
Bullish Momentum: Each steeper line shows that buyers are stepping in more aggressively, providing a clear indication of increasing momentum.
Dynamic Support: The trendlines offer dynamic levels of support from which trend continuation traders can time buying pullbacks.
Exponential Exhaustion: Progressively steeper trendlines signal an exponential nature to the share price rally, which is rarely sustainable.
Combine With Structure and Indicators: Combining the ascending trendline fan with key horizontal levels and the RSI indicator reveals that Arm’s exponential rally took prices into overbought territory on the RSI. This coincided with prices retesting a key level of resistance, and we have subsequently seen Arm’s rally stall in recent sessions.
ARM Daily Candle Chart
Past performance is not a reliable indicator of future results
Identifying Key Inflection Points
On the hourly candle, recent price action has formed opposing pin-bar candles, creating two key inflection points that can be used as trigger points for short-term traders.
A break above the upper trigger point could signal a new phase of Arm’s uptrend, while a break below the lower trigger point could see a deeper retracement back towards the lower ascending trendlines.
ARM Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.84% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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