After Monday’s nearly 30% rise, Supermicro stock price levels are worth keeping an eye on

Shares of Super Micro Computer (SMCI) rose nearly 30% on Monday after the troubled server maker said an independent review of its accounting practices found no wrongdoing.

Accusations of accounting-related irregularities earlier this year led to the late filing of several financial reports, raising fears of a possible delisting from the Nasdaq. Those fears grew after the company’s auditor resigned in October.

After falling as much as 86% from their peak in early March, shares of the one-time artificial intelligence (AI) darling have more than doubled from last month’s lows after the company filed a compliance plan with Nasdaq and had announced a new auditor. It added that it now expects to file its delayed financial results.

Shares of Supermicro rose 29% to $42 in Monday’s regular session before rising another 4% in extended trading.

Below, we break down the technical data on Supermicro’s weekly chart and point out key price levels worth paying attention to.

Descending broadening formation

After turning into a bear trap last month, Supermicro shares continued to rise, reclaiming the lower trend line of a descending, widening formation that has been on the chart since the stock peaked in early March.

Importantly, above-average trading volumes have supported the rise, indicating buying participation from larger market participants such as institutional investors. While the relative strength index (RSI) remains below 50, it continues to rise, indicating improving price momentum.

Let’s identify some key overhead areas on Supermicro’s chart that investors may want to keep an eye on, and also look at two key support levels to monitor during retracements.

Key overhead areas to keep an eye on

Given further upward momentum, investors should initially keep an eye on the $50 mark. This area on the chart could provide resistance near the psychological round number, which is also in close proximity to the early August low and the late October high.

A decisive close above this level could see the stock rise to around $64, a position on the chart where the price could face selling pressure near August’s counter-trend high. This area also currently corresponds to the 50-week moving average (MA).

Further positive price action could fuel a rally to the $97 area. Investors at this level could be looking for exit points near a series of peaks on the chart, just below the stock’s record high in March.

Important support levels to monitor

The first major support level to monitor is around $30. A pullback to this area could send investors looking for buying opportunities near the top trendline of a five-month consolidation period that formed on the chart between August and December last year.

Eventually, a sharper decline could see Supermicro shares fall back to the $23 level. This position on the chart, slightly below the closely watched 200-week MA, would likely provide support near the lower trendline of the aforementioned consolidation period.

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At the time of writing, the author does not own any of the securities mentioned above.