Technical Analysis

Taiwan Semiconductor Manufacturing Company within the “dynamic area” on chart

By Antreas Themistokleous

03 January 2023

Taiwan Semiconductor Manufacturing Company Inc (symbol ‘TSM’) stock value has made some losses in the last month of the quarter, but it is still on the positive side when it comes to overall quarterly gains. The company is expected to report its earnings for the quarter on Thursday 12th of January. The consensus EPS is $1.78 compared to the result for the same quarter last year of $1.15. 

The company is expanding rapidly with investments outside of Taiwan, like a new chip plant in Japan, is currently reviewing expansion in Germany, and also earlier this month they announced that they will triple the investment for the new Arizona plant to $40 Billion (one of the largest foreign investments in U.S. history).’ 

The major clients of TSM are tech giants like Apple and Nvidia , establishing their status in the semiconductor industry.

Based on technical analysis, the price continues to drop on a slow pace for the whole month of December, and is currently trading just below the $75 area after finding support on the 38.2% of the daily Fibonacci retracement level and the 50 day moving average. It is trading in the “dynamic area” of support between the 50 and 100 moving averages. 

The Stochastic indicator is in the extreme oversold level, possibly signaling a correction to the upside before maybe resuming the bearish momentum built up in the previous month. If this correction is made, we might see some resistance around the $77 price area, which is just below the 23.6% of the Fibonacci and also the 20 day moving average. 

If the price manages to make a valid break below the $73, which consists of the 38.2% of the Fibonacci, the 50 day moving average and the lower band of the Bollinger bands, then we might expect some support around $70, which is the psychological support of the round number and also just below the 50% of the Fibonacci.

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