AMD Rally Pauses for Breath: Wave 4 Setup Before New Highs

AMD is in a very strong uptrend, supported by the impressive rally since early October when it gapped higher on positive AI news. Since then, the stock has gained more than 50%, and this bullish momentum could continue after a retracement, especially considering the company’s better-than-expected earnings report. From an Elliott Wave perspective, we assume that the market could still make a corrective pullback before resuming higher, ideally forming wave four within a broader five-wave sequence. The previous high around 227 could act as the first key support, followed by the 200 area, which also aligns with an unfilled gap. At this stage, the price looks a bit overextended and risky for new entries, but once a solid retracement occurs, more upside potential remains open toward wave five — as long as the market stays above the 186 invalidation level and the trendline support from the April lows.

Also, note the RSI divergence shown on the chart, which supports the idea of a short-term correction before the next leg higher. 

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Highlights:
Trend: Strong uptrend, wave four correction in view
Support: 227 / 200 zone
Invalidation: Below 186