Key takeout
- Applied digital shares could remain on investors' radar screens after more than doubled last week following news of a deal to lease data center space to AI Darling CoreWeave
- Stocks form cups and handles on the charts, and prices could potentially mark the start of new long-term moves, staging a decisive breakout on top of the top trending line of last week's pattern.
- Investors will need to watch key overhead areas around $17, $28 and $46.70 on the Applied Digital charts, and monitor key support levels near $10.50.
Applied Digital (APLD) stocks could remain on investors' radar screens following news of a transaction lease data center space to AI Darling CoreWeave (CRWV) last week.
The company said it expects the deal. It said it will host AI infrastructure on campus Ellendale, generating $7 billion in total revenue over 15 years, accelerating its strategic expansion into sophisticated computing infrastructure. Both Applied Digital and CoreWeave are supported by AI-chip giant Nvidia (NVDA).
Last week, Applied Digital Shares won 103%, closing on Friday at $13.86. The stock has more than tripled in the last 12 months, boosted by expectations that it is well placed to take advantage of the booming demand for AI infrastructure.
Below we take a closer look at Applied Digital's weekly charts and use technical analysis to identify key pricing levels that investors may be seeing.
Cup and Handle Breakout
Applied Digital Shares could potentially mark the start of a new long-term move, forming a chart cup and handle that stages the price to stage a decisive breakout above the top trending lines of last week's pattern.
It is worth pointing out that this rally occurred in a significant volume of trading, indicating a strong purchase conviction from larger market participants. Additionally, the relative strength index checks bullish price momentum with reads just below the indicator's shopping oversole threshold.
Identify three important overhead areas on the Applied Digital chart to view during recent meetings of stocks and find key support levels worth watching during potential pullbacks.
Important overhead areas to see
With more momentum, we found that the stock would first rise to the $17 area. This location on the chart may provide overhead sales pressure near a series of prices around the counter trend high in April 2022.
Above this level could drive meetings towards $28. Investors can find exit points for this area near two notable peaks formed on the chart in the fourth quarter of 2021.
Investors can use measurement principles to project long-term upward price targets if a stock moves above a record high and into price discovery mode. To apply this technique, calculate the rate of change in the cup and handle “cup” and add it to the trendline value of the pattern. For example, apply a 345% increase to $10.50 and project a goal of $46.70.
Key support levels worth monitoring
During the pullback of Applied Digital Shares, investors need to pay attention to the $10.50 level. Those who don't want to chase a breakout can seek out opportunities to buy near the cup and handle the top trendlines of the pattern.
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As of the date this article was written, the author does not own the above securities.
