Watch These Supermicro Price Levels as Volatility Returns to Server Maker's Stock

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7 hours ago

Super Micro Computer shares jumped Tuesday, a day after they tumbled 10% following news the server maker plans to issue $2 billion in convertible bonds.
The stock broke down from a symmetrical triangle pattern in Monday's trading session on the highest volume since mid-May.
Investors should watch crucial support levels on Supermicro's chart around $38 and $30, while also tracking resistance levels near $48 and $62.Super Micro Computer (SMCI) shares rebounded Tuesday from a steep downturn the previous session that was sparked by news the server maker plans to issue $2 billion in convertible bonds.
The company said the bonds, which mature on June 15, 2030, will be used for general corporate purposes. The issuance likely put downward pressure on the stock price as it signals a potential dilution of Supermicro shares and an increase in debt levels, both of which can diminish shareholder value.
Supermicro shares have jumped 40% since the start of the year, but have lost half their value over the past 12 months amid a raft of accounting and corporate governance challenges that led to fears the company's stock would be delisted from the Nasdaq exchange in February. The stock was up nearly 5% at around $43 in mid-afternoon trading Tuesday, after dropping 10% yesterday.
Below, we break down the technicals on Supermicro's chart and point out crucial price levels worth watching out for.
After reclaiming the 200-day moving average (MA) last month, Supermicro shares consolidated within a symmetrical triangle before breaking down from the pattern in Monday's trading session on the highest volume since mid-May
Meanwhile, the move lower coincided with the relative strength index falling to its lowest reading in over a month to signal weakening price momentum.
However, in a win for the bulls, the 50-day MA recently crossed above the 200-day MA to form a 'golden cross,' a bullish chart signal pointing to a new trend higher.
Let's identify support and resistance levels on Supermicro's chart that investors will likely be watching.
The first support level to watch sits around $38. This area would likely provide support near the two key moving averages and a range of peaks and troughs on the chart extending back to last September.
The bulls' inability to defend this crucial level could see the shares revisit lower support at $30. Investors may look to accumulate shares in this location near a series of troughs that formed on the chart between December and April. This level also roughly matches a downside target when taking the price bars that followed an earlier breakdown from a symmetrical triangle and repositions them from the current breakdown.
A prompt recovery could form a bear trap, triggering a rally toward $48. The shares may run into overhead selling pressure in this region near the top of the symmetrical triangle, which closely corresponds with a range of trading activity on the chart stretching back to last August's notable swing low.
Finally, buying above this level could see Supermicro shares climb to around $62. Investors who bought at lower prices may place sell orders in this location near prominent peaks that developed on the chart in August last year and February this year.
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