Intel’s Stock Charts Look After Its Big Rally. Should You Buy It?

The perception of whether a stock is poised for gains or declines often depends on individual perspectives.

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Intel’s shares (INTC) recently experienced their strongest weekly performance in 25 years. However, the significance of this surge varies depending on when and why an investor purchased the stock. Short-term traders might view it as a strong breakout, while long-term investors may still see it as part of a broader trend that remains intact for now.

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Instead of examining every possible viewpoint, let’s consider the scenario of a short-term investor who bought shares just before this major rally. Analyzing their decision-making process could also provide useful insights for investors with different strategies.

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Before the rally, this hypothetical investor had watched Intel suffer its worst single-day drop in five decades back in August. Since then, the stock had repeatedly attempted to drop below $20—especially after the company’s CEO was ousted on December 2—but never fell below $18.

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Earlier this month, bearish investors attempted again to push the price below $20. However, after failing to break below $19 several times, our short-term trader saw an opportunity and decided to buy.

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Following the stock’s impressive rally, it successfully broke through a well-defined, yearlong downward trend line, signaling the potential beginning of a new upward trend. The strength of this breakout is notable because the trend line had at least five touchpoints—while typically, only three are needed to establish a valid trend.

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With Friday’s slight pullback, this investor now faces a critical decision: should they take some profits?

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A useful strategy in moments of uncertainty is to view the situation from a different perspective. Some traders physically flip a chart upside down or examine a longer-term trend to gain clarity.

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For instance, our investor could pull back and analyze a five-year chart. Instead of debating whether to sell, they might ask themselves, “Would I buy the stock at this level?”

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From that vantage point, it appears the stock has hit a major resistance level—one that has previously proven difficult to surpass. This makes the decision clearer: selling at least a portion of the position could be wise, potentially bringing the breakeven price down to a level below the stock’s current support zone. While the trade might still succeed in the long run, it could face significant challenges along the way.

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In technical analysis, past support levels often turn into resistance when revisited. The stronger the previous support, the harder it becomes to break through that resistance. This happens because investors who bought at the prior support level but held through the downturn often rush to sell once they break even.

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For Intel, the $25 price level—first tested in October 2022—served as a crucial support point, halting an 18-month decline that was gaining momentum. When bears attempted to break below this level for the third time, they failed, sparking a rally that ultimately doubled the stock’s price.

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That same resistance proved effective in capping the stock’s first rally attempt, and there’s a strong possibility it could do so again, at least temporarily. Even if Intel does push past it, the process won’t be easy. The investor who bought before the recent breakout might have to endure multiple pullbacks, testing their resolve.

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If the stock eventually clears this resistance, another hurdle awaits—the upper boundary of the August 2024 breakdown gap—followed by a previously strong support level near $30.

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Given these potential challenges, locking in some profits now could reduce stress and allow for flexibility moving forward. Investors don’t have to approach trading as an all-or-nothing decision. Selling a portion of shares now provides an opportunity to reinvest later—either on a dip or after a confirmed breakout.

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Interestingly, the opportunity to buy back shares might arise soon. Despite the overhead resistance, bullish momentum has gained traction, suggesting a larger move could be in progress.

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There now appears to be strong support just below the stock’s current price. Bears may hesitate to push for another breakdown, and unlike previous rallies, this one has twice surpassed the 200-day moving average—a key long-term trend indicator.

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Additionally, a momentum gauge known as the rate-of-change indicator suggests that bullish momentum has been building for months. Each failed attempt by bears to break support has seemingly strengthened the bulls’ position. When a stock remains flat or declines while momentum rises—an event known as bullish technical divergence—it often signals an impending breakout.

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So, what does this mean for someone considering a new position in Intel?

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It’s likely not the best time to buy while the stock is near a long-term resistance zone. However, it could be worth watching for a pullback toward a support level, where a buy opportunity might arise—ideally with a stop-loss placed below $18 for risk management. If resistance is eventually overcome, the stock may enter a prolonged uptrend.

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