:max_bytes(150000):strip_icc()/SOXXChart-19a2950d4935453facd87a2d85e93e19.gif "Watch these SOXX ETF price levels amid high volatility in the chip sector")
The central theses
- The iShares Semiconductor ETF fell nearly 3 percent on Wednesday due to increased volatility in the chip sector following Monday’s global equity sell-off.
- The fund has fallen below the closely watched 200-day moving average, with a brief attempt to reclaim the indicator on Wednesday failing after the price closed toward its session low.
- The SOXX ETF could face support at key chart levels including $195 and $179, while it faces overhead resistance at $215 and $239.
The iShares Semiconductor ETF (SOXX) lost nearly 3% on Wednesday due to increased volatility in the chip sector following Monday’s global stock market sell-off. This week’s decline coincided with a report that AI darling Nvidia’s (NVDA) highly anticipated Blackwell chips would be delayed by at least three months.
Over the past week, the ETF has come under increasing pressure due to growing concerns about the health of the U.S. economy and disappointing earnings from chip giant Intel (INTC), which has a 2.93% stake in the fund’s portfolio.
On Wednesday, the fund fell 2.8 percent to close at $199.29, its lowest since mid-April.
Below we take a closer look at the SOXX ETF chart, using technical analysis to highlight key support and resistance levels to watch out for.
Failed attempt to restore the 200-day average
Since its peak last month, the SOXX ETF has seen a significant correction of around 25% on above-average volume, indicating the conviction of institutional investors behind this move.
Recently, the fund has fallen below the closely watched 200-day moving average (MA), with a brief attempt to re-reach the indicator on Wednesday failing after the price closed toward its session low.
Monitor these key support areas
If the fund continues to decline, investors should keep an eye on two key areas where the price could attract buying interest.
The first level is around $195, just 2% below Wednesday’s close. This level on the chart could have buyers looking for entry points near a horizontal line connecting the December 2023 high and the January low, which also closely aligns with Monday’s sell-off low.
A breakdown below this level may result in a retest of the $179 area, an area where the ETF would likely find support from the July 2023 swing high and the January swing low.
Important resistance levels to keep an eye on
If buyers reclaim the 200-day MA, it is worth keeping an eye on several key price levels on the chart where the fund may encounter selling pressure.
First, an initial recovery attempt could face resistance around $215, close to a range of comparable trading levels between late February and early May, roughly corresponding to the August 2 pre-gap low.
A move above this area could take the fund to $239, a level where sellers would be happy to lock in profits near the March and May highs, which are currently very close to the downtrending 50-day moving average.
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At the time of writing, the author does not own any of the securities mentioned above.
