The Chips Are Down for ASML Holding, but Are the Charts?

ASML Holding ASML is trading around 9% lower Wednesday over fears that more U.S. export curbs on China will dampen solid second-quarter bookings for the manufacturer of the lithography machines that are an essential component in chip manufacturing.

Let's check the condition of the charts.

In this daily bar chart of ASML, below, I can see that prices could test and break both the rising 50-day moving average line and the lows of late June. This kind of price move, should it happen by Wednesday's close, will break the pattern of higher-lows. Interestingly the daily On-Balance-Volume (OBV) line has moved sideways since February and has made a large bearish divergence when compared to the price action. 

The Moving Average Convergence Divergence (MACD) oscillator made a lower-high in June vs. February for another large bearish divergence. Interesting.

In this weekly Japanese candlestick chart of ASML, below, I am looking closely at the two most recent candle patterns. First we have a doji or a spinning top. Both patterns can be part of a top reversal. The second candle is bearish (red) and could be a bearish engulfing pattern even though the prior candle was also red (my interpretation and not Steve Nison's). A weak candle pattern this week will be confirmation of a top.

In this daily Point and Figure chart of ASML, below, I can see an upside price target but a trade at $1,000 or lower should turn this chart bearish. Let's see how the trading goes today.

In this weekly Point and Figure chart of ASML, below, I can see that prices reached a price target in the $1,109 area.

Bottom line strategy: It is interesting and a bit scary how some stocks can turn on a dime or rather a comment or two from a political candidate. Raise your sell stops or reduce your exposure to ASML.

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