$TSM Potential Reversal at Resistance

30 mar 2022

TSM broke down from a massive range / double top. After price peeked back into the range and above the 20-day, it reversed and closed below both after today's action. This deviation likely leaves a lot of bulls offsides (bull trap) which could fuel a selloff in the stock. There's no reason to believe that Apple is planning on moving away from TSM or that there will be a Chinese invasion of Taiwan, but price typically precedes news. The US is aggressively funding semiconductor fab domestically, which leaves TSM at a disadvantage. The stock may just be correcting to account for perceived increased geopolitical risk. Whatever the reason, the chart is showing weakness. With the Nasdaq overbought and selling off today, now may be a good time to take a short on TSM.

I'm short at $107.10 with a stop loss at $109.76.