Western Digital Corporation’s Q3 Earnings: Fuel for a $75 breakout?

By:
on Apr 22, 2024
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  • WDC braces for crucial Q3 earnings
  • Strategic separation plan reflects transformational shift in operations.
  • Chart analysis indicates bullish sentiment above $63 support level.

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As Western Digital Corporation (NASDAQ: WDC) prepares to announce its Q3 earnings later this week, investors are poised on the edge of their seats, eagerly anticipating the company’s performance amidst a pivotal moment in its trajectory.

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Western Digital’s positioning within the semiconductor industry, positions it as a key player in the storage market’s resurgence. As the memory and storage sector navigates the waves of recovery following a tumultuous period of decline, Western Digital stands at the forefront, poised to capitalize on emerging opportunities.

The recent announcement of its plan to separate its HDD and Flash Memory business into independent entities reflects a strategic shift in its operations. With the impending spinoff set to reshape the company’s landscape, analysts and stakeholders alike are scrutinizing Western Digital’s every move, seeking clues as to its future direction and potential for growth.

Against this backdrop of transformation and anticipation, technical analysis emerges as a beacon of insight, offering a lens through which to gauge the stock’s trajectory. So, let’s look at what the charts have to say about where the stock is headed.

Steady Above $63

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Examining Western Digital’s 4-hour timeframe chart reveals several noteworthy trends. Firstly, since its Q1 earnings in October 2023, the stock has maintained a robust uptrend, surging from a low of $35.64 to a high of $76.90. Secondly, the $63 level has emerged as a formidable support level following a gap-up opening on March 21, 2024.

WDC chart by TradingView

Despite recent short-term momentum indicators turning negative amidst a decline from $75 to $67, Western Digital remains above its bullish trendline established since October 2023. Additionally, the stock continues to trade above the $63 support level, signaling bullish sentiment.

For long-term investors, these indicators offer optimism. Maintaining above $63 ahead of earnings, coupled with positive results, could see Western Digital retesting its $75 high. Even in the event of disappointing earnings, sustained trading above $63 suggests ongoing upward momentum.

Traders adopting a bearish stance must also monitor the $63 level closely. A breach below this support level post-Q3 earnings could signal a short opportunity, with a stop loss set near $70. Should the stock fall below $63, potential downside targets include $52 and, failing support, $46.8.

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