Advanced Micro Devices ($AMD) has been forming a bullish Cup and Handle pattern and is now setting up for potential breakout entry. Here’s our basic technical analysis of this hot swing trade setup.

On April 28, we posted that Advanced Micro Devices ($AMD) was setting up for potential breakout entry if the stock broke out on a positive reaction to its quarterly earnings report.

Later that day, $AMD reported earnings that were in line with expectations, and the post-earnings price reaction was relatively tame.

However, Advanced Micro Devices has continued to act well since then and is once again setting up for potential breakout buy entry.

On the chart below, notice how the daily trading range of $AMD has been tightening up. The stock is now testing resistance with a classic consolidation pattern:

After stalling just above the prior high in late April and selling off in reaction to earnings in early May, the daily price action of $AMD is finally starting to tighten up.

Both the 10-day moving average and 20-day exponential moving average are now rising and providing near-term support below the current price.

Now, $AMD is once again testing a key area of resistance formed by the highs of a few ugly red candlesticks annotated on the chart: point “a” (Feb. 21), “b” (April 21), and “c” (May 12) continue to act as resistance.

With tight price consolidation and a cup and handle chart pattern, a close above resistance in the $57.50 to $58 area would be a positive change of character for $AMD–especially if accompanied by heavier than average volume on the breakout.

Morpheus subscribers are already long $AMD in the model portfolio of The Wagner Daily, our nightly swing trading report. Still, we plan to add to the position if/when the price clears resistance.