On October 26th, Intel (INTC) posted quarterly earnings results and beat both revenue and EPS estimates. It resulted in a very strong gap higher the next morning and then INTC continued rising, tacking on another 10% within a week. But INTC became very overbought with an RSI above 90 and needed a pullback. Since topping in early November, INTC has lost close to 10% and is now testing the top of gap support and its rising 50 day SMA:
The RSI has fallen back into the 40s (black arrow) and that's typically a level where we see prices turn higher again in an uptrend. The huge rally in September and October began after an RSI 40 test in August so I like the odds of a similar reversal at or near the current level. The initial Fibonacci retracement level is also quickly approaching and could produce additional technical buyers at that 38.2% retracement.
Happy trading!
Tom
