SOXL’s Recent Highs and Consolidation
The Direxion Daily Semiconductor Bull 3X Shares (SOXL) saw a surge to new 25-month highs between March 1 and March 8. Following this peak, the ETF started a consolidation phase, dropping approximately 18% from its high of $56.99 on March 8.
Technical Indicators and Potential for Growth
The recent consolidation has brought SOXL’s relative strength index (RSI) down to a more moderate 56% from around 75%. This adjustment may pave the way for a potential surge once consolidation is complete. The trajectory will likely hinge on the performance of major holdings such as Nvidia Corporation (NVDA) and Advanced Micro Devices, Inc (AMD).
Key Holders and Weightage
AMD holds an 8.67% weight within the SOXL fund, followed closely by Broadcom, Inc (AVGO) at 8.59%. Nvidia stands as the third largest holding with a weight of 7.54% in the ETF.
Analyst Projections and Market Sentiment
Recently, BofA Securities analyst Vivek Arya reiterated a Buy rating on Nvidia stock and raised the price target from $925 to $1,100. This adjustment indicates a potential 21% upside, signaling room for Nvidia to climb higher.
Chart Analysis and Forecast
Chart patterns show that SOXL has bounced up from the $45 mark on multiple occasions, forming a triple bottom pattern that suggests strong support at that level. If SOXL continues to trade higher, breaking through resistance levels, it could negate the recent downtrend and move towards the $50 and $55.94 resistance marks. Conversely, a dip below $45 could accelerate downside pressure.
- SOXL’s formation of a hammer candlestick on the daily chart hints at a possible bottoming out.
- A break above Tuesday’s high-of-day could indicate a bullish breakout from a rising channel pattern maintained since Dec. 14.
- Bearish traders would seek a drop below $45 to undermine the triple bottom pattern and potentially trigger further declines.
- Key levels to watch include $44.97 and $41.60 for support, and $50 and $55.94 for resistance.
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