MU Micron Technology Weekly Chart H&S Gaps

A reader wants a look at Micron where option activity is picking up. MU was a phenomenal winner from 6 to 36 a six times increase, +500%. MU topped late last year due to the negative divergence (red lines), overbot conditions and red rising wedge pattern. The purple bars and lines show a head and shoulders (H&S) pattern with head at 36.80 and neck line at 28.80. The H&S targets 20.80 (28.80-8.00), call it 21-ish which is strong price support from late 2013 and early 2014. The neck line at 29-ish failed and price meanders lower after back kissing the neck line failure. Price is now at the gap fill from April 2014.

If MU collapses from here to 23.5 and heads lower that would create an island reversal pattern which is on the table. There are other gaps on the way up (blue circles) that serve as future downside targets. Over the last few months since March, the lower price results in positive divergence with the histogram, stochastics and money flow so a bounce in the weekly time frame is near. The RSI and MACD line remains flat to weak and bleak, however, hinting that after a quick bounce, say for a week or two, price will likely come back down again to explore the 21-25 area. At that time a more substantive recovery rally may develop.

The fly in the ointment for the big picture is the weak and bleak monthly chart so after MU recovers say during the summer time, lower prices would be expected with price achieving the H&S lower target at 21 as the year plays out. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.