Texas Instruments Incorporated: The Only Price to Watch on TXN Stock

TXN Stock all time highTXN Stock: Approaching the All-Time High

Texas Instruments Incorporated (NASDAQ:TXN) stock is setting up to run once again. The trend toward higher prices continues, and the constructive price indicators that have been supporting an advance in TXN stock continue to mount.

I stated in my previous publication about this company that Texas Instruments stock is on its way to test its infamous high that was set in March 2000. This date marked the peak of the dotcom technology bubble, and a devastating bust followed soon after. This bust erased a total of 86% of Texas Instruments stock’s valuation in a matter of 2.5 years, in what was a devastating bear market.

Some 17 years later, and Texas Instruments stock is only points away from reaching this monumental level once again, and there is little to suggest that it will fail to do so. The question becomes: what will happen when this level is finally reached? Will TXN stock continue its advance, or will some sort of correction ensue?

Perhaps the Texas Instruments stock chart can shed some light on these questions.

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The following TXN stock chart illustrates the bullish price action that supports a test of the all-time high.

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Chart courtesy of StockCharts.com

The Texas Instruments stock chart exhibits healthy price action that supports a further advance. This healthy price action consists of impulse waves that advance the price of Texas Instruments stock, and consolidation waves that unwind any overbought conditions and set up the next impulse wave.

These waves continue to flow into each other in an orderly manner. A new consolidation wave is now in development after the previous one was tested from above. This price action is what traders refer to as a backtest, as the price returned to test a previous level of resistance from above. This price action solidifies the new level as support.

A new impulse wave is set to develop when TXN stock exits from the new consolidation wave in an upward direction by closing above resistance at $75.25. This feat would set the wheels in motion for Texas Instruments stock to test the all-time high at $79.45.

The following Texas Instruments stock chart illustrates the magnitude of the all-time high that was set in March 2000.

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Chart courtesy of StockCharts.com

It took 17 years for Texas Instruments stock to return near its all-time high that was set in March 2000, and there is little doubt in my mind that this level will act as some sort of resistance/pivot point. If there is anyone left who bought at the prevailing price, perhaps they will find some solace in selling, now that they have been made whole again. This might sound a bit ludicrous, but this is how a resistance level is created.

I cannot say for certain whether TXN stock is going to break above this level on the first attempt. Under most circumstances, I would expect some sort of reaction/sell-off to ensue as this level is tested for the first time in almost two decades. At the same time, The NASDAQ index has already surpassed the tech bubble high it created in March 2000, and it continues to forge new highs.

If a sell-off does ensue, I would be looking at the following levels of support to hold in order to indicate that the bull market in TXN stock is still intact.

The following Texas Instruments stock illustrates the levels of support that will be eyed by traders.

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Chart courtesy of StockCharts.com

There are two key levels of support on the Texas Instruments stock chart above that traders would be watching if TXN stock fails to break above the previous all-time high.

The first level of support is defined by using a horizontal trend line. This trend line acted like resistance in 2015 and prevented TXN stock from advancing beyond it. In 2016, TXN stock finally penetrated this level and, as a result, resistance was broken. When a level of resistance is broken, it becomes a level of support, and it is not uncommon for the price to return to this level from above.

An uptrend line, created by connecting the bottoms on the stock chart pattern above, defines the second level of support for Texas Instruments stock. Since the financial crisis eight years ago, this uptrend line has represented the overall bull market run in TXN stock. If TXN stock closes below this uptrend line, it indicates that a bear market in Texas Instruments stock has begun and price will fall as a result.

Both levels of support are converging on one price, so this suggests that, if a sell-off does ensue, this level should provide ample support to halt any further selling.

Bottom Line on Texas Instruments stock

TXN stock continues to trend higher, and that ever-elusive all-time high is now in sight. The reaction that occurs when it reaches this level will dictate whether Texas Instruments stock continues to soar or a pullback ensues. Either way, I expect some sort of turbulence to occur when this level is tested.