Watch These Supermicro Price Levels as Stock Drops on Slashed Outlook

Super Micro Computer (SMCI) shares fell Wednesday after the embattled server maker sliced its full-year revenue outlook.

While the company, in a late-Tuesday announcement, said it expects delayed client product purchases in its most recent quarter to land in the June and September quarters, it cautioned that economic uncertainty and tariff impacts may have a short-term impact on sales.

Supermicro shares have had a volatile year, more than doubling from their January low to February high before falling nearly 60% from their February peak to April trough. The shares have lost three-fifths of their value over the past 12 months amid a number of highly publicized accounting and corporate governance challenges that led to concerns of a potential Nasdaq delisting.

The stock closed 1.4% lower at $32.48 on Wednesday, after tumbling as much as 7% during the session.

Below, we break down the technicals on Supermicro’s chart and identify crucial price levels worth watching out for.

Ascending Channel’s Lower Trendline in Play

Supermicro shares have fluctuated withing an ascending channel since gapping below the respected 50-day moving average in late October last year.

In recent weeks, the price has tracked mostly sideways on lackluster trading volume near the pattern’s lower trendline, with the 50-day MA acting as a resistance line.

Moreover, the server maker’s light annual guidance looks set to keep the relative strength index (RSI) below neutral territory, signaling bearish price momentum and a potential breakdown below the ascending channel’s lower trendline.

Let’s identify crucial support and resistance levels on Supermicro’s chart.

Crucial Support Levels to Monitor

A decisive close below the ascending channel’s lower trendline could see the shares fall to around $28. This area on the chart may provide support near the April and January troughs, which also closely align with a brief countertrend high in early November.

Further selling opens the door for a drop to the $17 level. Investors could seek buying opportunities in this region near the steep November swing low, which also marks the stock’s 2024 low.

Key Resistance Levels to Watch

A successful hold of the ascending channel’s lower trendline could spark an initial rally toward $50. The shares may run into overhead selling pressure in this area near the psychological round number and a trendline that links a range of corresponding price action on the chart extending back to August last year.

Finally, buying above this level brings the $63 level into play. Investors could decide to sell Supermicro shares in this region near a horizontal line that links last August’s countertrend peak with the notable February swing high. 

This location also sits in the same neighborhood as a projected bars pattern target that takes the stock’s first move higher within the ascending channel and repositions it from the pattern’s lower trendline, providing clues as to how a potential recovery effort may play out.

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As of the date this article was written, the author does not own any of the above securities.