NXV Semiconductor NV (NXPI) has underperformed the broader S&P500 over the past quarter. The chart pattern analysis shows that the price action has formed a rectangle pattern. While the stock stayed in this pattern, it consolidated and traded in a sideways trajectory.
Within this sideways pattern, the stock formed a higher bottom and attempted to break out of this formation. However, it suffered a throwback which took NXPI back to the level from where it originally broke out. Technical charts show that if the stock resumes its up-move, it is set to return good gains going ahead.
Applying principles of classical technical analysis, if the current pattern is resolved in the intended direction, then the stock is likely to test 230, and 238 levels. The potential target prices are arrived at using tools to measure price measurement implications using the classical methods of Technical Analysis.
The current technical view is further supported by an analysis of NXPI on the Relative Rotation Graph.
On the above Relative Rotation Graph (RRG), we plot NXPI on the daily timeframe with S&P500 as the benchmark.
The trajectory of the tail shows that while the stock was in the weakening quadrant, it saw a sharp improvement in its relative momentum and has rolled inside the leading quadrant.
This would mean that the relative outperformance of NXPI may resume against the broader S&P500 index.
If the current technical setup on the chart resolves on the expected lines, the stock has the potential to test 230, and 240 levels. This translates into an upside potential of ~7% over the coming days.
Any move below 200 will negate this view.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)