Want to Pick a Low in Intel? What the Charts Reveal

Intel Corp. INTC is not expected to report their quarterly earnings until October 27 but some Real Money subscribers seem to be "chomping at the bit" to buy this current weakness in the chip maker. I understand the concept of "undervalued" but technical analysts want to see validation from the price action.

Let's check the latest charts and indicators.

In the daily Japanese candlestick chart of INTC, below, we can see a downward trend since January for the chip maker. Prices are trading well below the declining 50-day moving average line and the bearish 200-day moving average line. The trading volume shows an increase in the past six weeks. The On-Balance-Volume (OBV) line shows a long decline into October and only the slightest signs of improvement, so far.

The 12-day price momentum study in the lower panel shows higher lows from August telling us that the pace of the decline has slowed down and down. This is a bullish divergence between the movement of the indicator and prices. A bullish divergence can, at times, foreshadow a rebound rally. Stay tuned.

In the weekly Japanese candlestick chart of INTC, below, we can see that the latest weekly candle is a doji -- showing us a balance between bulls and bears. A bullish candlestick pattern this week will be sufficient to generate a bottom reversal.

The 40-week moving average line is still bearish and the weekly OBV line is negative too but the slow stochastic indicator is very oversold and prone to a turn higher.

In this daily Point and Figure chart of INTC, below, we can see that the stock has reached a downside price target. This is not as exciting as showing us a potential upside price target but it is a start.

Bottom-line strategy: Aggressive traders who have experience with trading bear market bounces could go long INTC at current levels risking a new low close. Use your experience and discretion on where to get out.

Employees of TheStreet are prohibited from trading individual securities.