TSMC Shares Plunge 3.61% Amid Technical Breakdown And Bearish Indicators

TSMC shares experienced a pronounced 3.61% decline in the latest session, closing at 232.7 on elevated volume, prompting a comprehensive technical evaluation of the stock's trajectory across multiple indicators.
Candlestick Theory
The recent session formed a long upper shadow candle (high: 240.16, close: 232.7), signaling rejection at higher prices after three consecutive bearish candles. This pattern suggests persistent selling pressure, establishing immediate resistance at 240.16–241.41 (recent swing highs). Critical support lies at 232.58 (intraday low), aligning with the July consolidation floor near 231. A decisive break below 232.58 may trigger accelerated downside targeting 225. Conversely, a close above 240.16 would indicate bear exhaustion.
Moving Average Theory
Price has decisively breached both the 50-day SMA (~235) and 100-day SMA (~233) during the sell-off, reflecting deteriorating intermediate momentum. The 200-day SMA (~210) remains ascending below current levels, preserving the long-term uptrend structure. However, the emerging death cross formation (50-day crossing below 100-day SMA) warns of potential mid-term bearish momentum, with the current price trading below all key short-term averages suggesting near-term downward bias.
MACD & KDJ Indicators
The MACD histogram shows accelerating negative momentum, with the MACD line entrenched below the signal line since late July – a classic bearish continuation signal. KDJ oscillators reflect extreme short-term oversold conditions (K: <20, D: <25, J: <10), though the lack of bullish divergence suggests no imminent reversal. While KDJ readings hint at tactical exhaustion, the MACD’s entrenched bearish alignment implies any bounce may be short-lived without volume confirmation.
Bollinger Bands
Price is testing the lower Bollinger Band (~231) amid significant band expansion (+20% bandwidth in 10 sessions), confirming elevated volatility and directional bearish momentum. The absence of mean-reversion signals near the lower band cautions against premature contrarian entries. A sustained close below the lower band would signal capitulation, while a recovery above the 20-day midline (238) could stabilize the pattern.
Volume-Price Relationship
Distribution days have dominated the decline, with the 14.5M shares traded on August 19 representing the highest volume in 30 sessions – validating the breakdown. Volume surges have consistently accompanied downside moves since the July peak at 245.6, while recovery attempts have lacked volume conviction. This divergence confirms institutional distribution and undermines the sustainability of rebound attempts, strengthening the bearish bias.
Relative Strength Index (RSI)
The 14-day RSI (33) has entered the neutral zone after rejecting the overbought threshold (70) in late July, but remains above oversold territory (30). This positioning indicates lingering downside capacity before reaching extreme oversold levels. The RSI’s lower high in August versus the July price peak signals weakening momentum, aligning with broader bearish confirmation.
Fibonacci Retracement
Applying Fibonacci to the primary rally from the May swing low (191.98) to the July peak (245.6) reveals critical retracement thresholds. The price has breached the initial 23.6% support (232.94) with conviction, targeting the 38.2% level (225.12). Confluence exists at 225, where this Fibonacci tier converges with the 100-day SMA and horizontal volume support. A failure to hold 232.94-225.12 could extend declines to the 50% retracement (218.79).
Confluence & Divergence Assessment
Confluence underscores the bearish posture: Volume confirms candlestick breakdowns; moving averages now act as resistance; MACD/Bollinger Band expansion validates volatility-driven downside; and Fibonacci targets align below current prices. The lone divergence arises from KDJ’s oversold extremes against the prevailing trend – a potential harbinger of tactical stabilization near 225.12 support. However, indicators collectively suggest residual downside probability before establishing durable support.