Will Taiwan Semiconductor Pull Back to Fill Its Upside Price Gap?

On Thursday Taiwan Semiconductor (TSM) beat their fourth-quarter top and bottom-line estimates and the chipmaker's stock gapped higher. Friday the shares are trading sideways as traders may be adjusting their positions.

Let's check out the charts and indicators of TSM to see if this breakout gap remains unfilled.  

In the daily bar chart of TSM, below, I can see Thursday's upside gap. The shares soared and trading volume was very heavy -- this is what bulls like to see for a successful upside breakout. The slopes of both the 50-day and the 200-day moving average lines are bullish.

The On-Balance-Volume (OBV) line has strengthened and has matched the price gains. The Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for a fresh outright buy signal. 

In this weekly Japanese candlestick chart of TSM, below, I can see a strong chart picture. The shares are making a large white (bullish) candle.

Trading volume has jumped and the weekly OBV line and MACD oscillator are strong and pointed higher. 

In this daily Point and Figure chart of TSM, below, I can see a potential upside price target in the $141 area. 

In this weekly Point and Figure chart of TSM, below, I can also see an upside price target in the $141 area. 

Bottom-line strategy: TSM is forming what I think will be a "rickshaw man" or a "long-legged doji" (see the chart below). This is a potential top reversal pattern but it will need bearish confirmation on Monday. The jury is out for now. 

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