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January 10 Chart of the Day - Texas Instruments

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Dallas based Texas Instruments Incorporated (TXN) designs and manufactures semiconductors and various integrated circuits. It is one of the top 10 semiconductor companies worldwide based on sales volume.

The company is in the headlines this week for introducing a new automotive chip at the Consumer Electronics Show (CES) claiming it can allow for safer vehicles.

Safer always sounds better doesn't it?

So we wanted to take a look at the company's chart from a price action technical analysis perspective.

On the monthly chart we can see extreme periods of both volatility and consolidation spanning the last three decades.

During the past five to seven years or so we can see a definitive uptrend since price broke above its previous $99.78 all time high (ATH).  This is important to note because after a period of sideways movement price has not revisited that area.

Closing at $168.63 yesterday price has fallen from its current $202.26 ATH with some violent and aggressive volatility to essential go nowhere the last 2-3 years.

During this time span we can see on the weekly chart designated with the light gray rectangle that price defined a change control zone roughly between $170 to $175.

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

In fact, price has crossed this zone a whopping 35 times in the last two years and respected the zone from the top or bottom 22 times with 3 of those occurrences coming in the last month...

This type of price action can prove to be frustrating to "buy and hold" investors but can be a trader's dream!  Especially for option traders.

Regardless of your personal style we've identified bi-directional levels of interest from which investors and traders can develop their respective plans.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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