As the chart shows, the closing price on January 24 = USD 173.79, closing price on January 25 = USD 190.19. At yesterday's peak, IBM's share price was above USD 196, helped by a strong fourth-quarter earnings report that was positive about the company's prospects due to advances in AI.
→ Total revenue was USD 17.381 billion, compared to USD 16.690 billion in the prior-year quarter.
→ The acquisition of Red Hat made IBM the fifth-largest cloud service provider by market share. This is very important given the industry's projected growth rate of 16% per year until 2028.
→ Advances in quantum computing, exemplified by the release of the 127-qubit Eagle quantum chip.
In addition, the company has increased dividends for 28 years in a row, making IBM shares attractive to a wide range of investors.
Technical analysis of the IBM stock price chart shows that:
→ the price has reached the upper border of the parallel channel (shown in blue);
→ the RSI indicator indicates strong overbought;
→ a long upper shadow formed on yesterday’s candle – a sign of sales activity. It is acceptable to assume that some investors rushed to take profits in order to later find an opportunity to re-enter a long position at lower prices.
Indeed, given the chart situation, IBM's share price is vulnerable to a pullback following the extremely positive report. If a pullback occurs, the price may find support in the area between the psychological levels of USD 175 and USD 180 per share of IBM, where the 50% Fibonacci level of the upward impulse A→B passes. The channel median line can also help the bulls.
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