AMD’s stock experienced a corrective decline, bottoming at the Equal Legs area, also called the Blue Box. The analysis indicates that AMD is in a wave 4 pullback, with the potential for further short-term decline toward the Blue Box.
The anticipated extension targets the 153.72-149.60 zone, where buying opportunities are considered. It is recommended not to sell AMD as the primary trend is upward, with a likely 3-wave bounce anticipated from the Blue Box.
Trade management involves making positions risk-free once price reaches the 50% fib level and setting stop-losses below the 1.618 fib extension. The stock found support at the Blue Box and has rallied toward new highs, with further upside expected if it remains above the 149.27 low.
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Looking back a few weeks, we saw AMD’s stock pull back precisely as anticipated into the support zone between $153.72 and $149.60. The stock found a firm bottom there, confirming that this was a healthy corrective pause in a larger uptrend. This price action reinforced our view that the primary trend remains strongly upward.
As of late July 2025, AMD is trading firmly above that support area, pushing towards the $185 level. This strength is backed by the latest Q2 2025 earnings report, where AMD beat expectations on the back of strong demand for its MI400 series AI accelerators. We believe this fundamental strength will continue to drive the stock higher in the coming weeks.
For derivative traders, this indicates that bullish strategies are favorable. We see an opportunity in selling out-of-the-money cash-secured puts with expiration dates in August or September, targeting strike prices near the $170 level. This strategy allows us to collect premium while defining a lower entry point if the market briefly dips.
Recent industry reports from this past quarter add to our confidence, showing AMD’s data center market share has now climbed to over 35%. The critical level we are watching is the $149.27 low from the last pullback. As long as the price remains above this floor, the path of least resistance is to the upside.
Traders who prefer to capture more of the upside potential should consider using call debit spreads. With implied volatility having increased after the positive earnings news, spreads offer a more capital-efficient way to position for a move toward new all-time highs. We are looking at this as a continuation of the primary upward wave.
This current setup reminds us of the consolidation we saw back in late 2024, where a similar technical dip was bought up aggressively, leading to a multi-month rally. That historical pattern suggests this recent bounce is not a short-term event. We expect this upward momentum to be sustained through the rest of the summer.
