My Watchlist [123]: ASML... The Situation.

Hi everyone. Today I’ll be looking at another semiconductor stock for the first time:

ASML Holding N.V. (NASDAQ: ASML)

ASML has been trading in an ascending channel (in green) since 2020 and a marked up ascending channel (in blue) since 2023. The most notable sign of bearishness in ASML’s chart is that:

1. It has hit the top of the green channel for the first time since the 2021 high;

2. It has broken down from the secondary ascending channel for the first time with a bearish engulfing reversal candle (*requires weekly close for confirmation);

3. Bearish divergences have shown up on the RSI and Stochastic RSI with a bearish crossover occurring on the latter, suggesting the start of a move lower

In the short term, I am expecting continuation towards the 878-888.67 island gap. If there is any attempt at a bounce to reset the Stochastic oscillator on the daily, I am expecting a rejection at, or slightly above 979.99. This level is crucial as ASML’s prior ATHs in 2021 sits at 895.93, but it ultimately rejected the 878-888.67 area at that point time. A successful retest of this level could negate the bearish patterns on this stock.

However, structural breakdowns, particularly for trends that have held for at least a year or more, usually give rise to larger moves lower. I see ASML retracing back towards the 759.47-765.53 area in the coming months to retest its prior resistance between Jul-Dec’23.

Unless ASML reclaims its secondary channel or breaks out above the main channel, I am not bullish on it. The bears have drawn blood by creating a mega-sized island gap at 979.99-1,060.74.

In light of the unfavourable technical setup on ASML, I am initiating coverage on it with a SELL sentiment.

Sentiment: SELL (New)

Summary (with Price Targets - NFA):

• Broke down from secondary ascending channel (in blue) with a bearish divergence setup

• Measured move should be to retest prior highs at 759.47-765.53 area

• Invalidation only happens if ASML can fill its bearish island gap at 979.99-1,060.74, reclaim its secondary channel, or break above its main ascending channel (in green)

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