Technical Analysis of Taiwan Semiconductor Manufacturing Company Limited (TSM)

Overview

• Symbol: TSM
• Current Price: $199.80
• Date: February 4, 2025
• Currency: USD

Historical Price Analysis

• Longest Range: November 6, 2024, to February 3, 2025
• Recent Price Trend: The stock has shown considerable volatility since November 2024, with significant movements between $184 to $226 levels.
• Current Context: After peaking at $224.62 on January 23, 2025, the stock saw a sharp drop to approximately $192 on January 27, suggesting some market anxiety or corrective activity which felt necessary after a rapid rise.

Technical Indicators

Moving Averages

• Simple Moving Average (SMA) 50-Day: Suggests a bullish trend as recent prices are higher than this average.
• SMA 200-Day: Prices are well above the 200-day average, indicating long-term strength and upwards trend.

Relative Strength Index (RSI)

• The RSI over the last period has been fluctuating, as evidenced by high peaks following significant troughs. RSI values would indicate a market approaching overbought conditions near recent peaks but retracting significantly, leaning towards a neutral positioning currently.

Moving Average Convergence Divergence (MACD)

• The MACD is showing bullishness with the MACD line slightly above the signal line, but with the price correction seen at the start of February, there is potential for crossover to the downside indicating potential weakness.

Chart Patterns and Analysis

• Trend Lines: On plotting trend lines from the data, there seems to be resistance forming around $203 to $205, and support sits mildly at $197.
• Volume Analysis: On days with key upward movement, there was also higher volume; notably, January 16th saw very high volume correlating with a jump to $214.79.
• Support and Resistance: Clear resistance observed near the $225 level due to the rapid retrace seen in late January 2025.
• Candlestick Patterns: Absence of clear bullish reversal or continuation patterns for now; rather, recent candles suggest indecision and oscillations at current price levels.

External Factors

• Market Sentiment and News: Global economic conditions, semiconductor demand, and TSM's market position will heavily influence future movement.
• Recent News Events: Any unknowns, such as geopolitical impacts, could shift the current trajectory unexpectedly.

Conclusion

• Current Sentiment: Given the current data, the stock seems to be over-correcting from its peak and is in a consolidation phase waiting for new directional signals.
• Volatility: Moderate-High given recent volatility spikes, suggesting caution for aggressive entry points.
• Final Recommendation: Hold off on a buying position immediately and consider awaiting a clearer signal for breakout upward beyond $205, which could signal entries for long.

Recommendation

Given the current analysis:

• Decision to Sell as the price shows recent weakness unable to break newer highs post a recent peak and correction.

Potential Trading Strategy

• Open Price: Look to sell around $200 given resistance observed upwards.
• Close Price: Target for a buy-back or exit closer to $195, conservatively gauging potential bottoming around support levels found in recent trades.

This analysis has synthesized technical indicators and recent trading data to inform a strategic approach to TSM as it fluctuates in the current market.