TSMC Surges 6.69% in Two-Day Rally as Technical Indicators Confirm Uptrend

TSMC (TSM) surged 5.17% in the most recent session, marking a two-day rally with a cumulative 6.69% gain. This sharp upward movement, coupled with elevated trading volumes in recent days, suggests strong short-term bullish momentum. The price action reflects a potential breakout from prior consolidation, warranting a detailed technical evaluation of key indicators and confluence points.
Candlestick Theory
Recent candlestick patterns indicate a strong reversal bias. A bullish engulfing pattern formed on January 2, 2026, as a large bullish candle engulfed the previous day’s bearish body, signaling a shift in sentiment. Key support levels are identified at $292.04 (December 12 close) and $276.96 (December 17 close), while resistance aligns with the recent high of $319.61. The price has tested the $303.89 level multiple times, suggesting a potential psychological threshold for further upward movement.
Moving Average Theory
The 50-day moving average currently sits above the 200-day line, confirming an uptrend. The 50-day MA at ~$295.50 intersects with the 100-day MA (~$290.00), indicating a narrowing convergence that may precede a breakout. Price remains above the 200-day MA (~$285.00), reinforcing long-term bullish bias. A crossover of the 50-day MA above the 200-day MA could signal a "golden cross," though current momentum suggests this may already be in progress.
MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line on January 2, 2026, suggesting accelerating bullish momentum. The KDJ indicator shows K-line at ~85 and D-line at ~75, indicating overbought conditions. However, the stochastic oscillator’s slow divergence (K-line failing to rise with price) may hint at near-term exhaustion. Caution is warranted as overbought readings often precede corrections unless accompanied by strong volume.
Bollinger Bands
Volatility has expanded recently, with price nearing the upper Bollinger Band (currently ~$325.00). The band’s width has widened by 20% from mid-December levels, reflecting increased market activity. A break above the upper band may confirm a bullish breakout, while a retest of the lower band (~$280.00) could act as a critical support level. The "squeeze" pattern observed in late December has resolved, aligning with the current breakout.
Volume-Price Relationship
Trading volumes have surged in the last two sessions, with January 2’s volume exceeding 18.5 million shares—nearly double the 30-day average. This validates the recent price strength, as increasing volume typically confirms trend sustainability. However, a divergence emerges in mid-December, where volume declined during a 3.45% drop on December 17, suggesting weak bearish conviction. Current volume patterns support the continuation of the uptrend but require sustained participation to avoid a pullback.
Relative Strength Index (RSI)
The 14-day RSI stands at ~72, nearing overbought territory. While this suggests potential for a short-term correction, the RSI’s divergence from price (lower highs vs. higher highs) raises caution. Historical data shows RSI frequently retesting the 70 level before resuming uptrends, particularly when supported by strong volume. A close below 60 would signal weakening momentum, while a breakout above 75 may indicate a new bullish phase.
Fibonacci Retracement
Key Fibonacci levels derived from the December 17 low ($276.96) to the January 2 high ($319.61) include 23.6% ($298.50), 38.2% ($305.00), and 61.8% ($311.50). The current price is near the 38.2% retracement level, which has acted as a dynamic support/resistance zone. A break above $311.50 could target the 78.6% level (~$317.00), while a decline below $298.50 may test the 23.6% level for further consolidation.
Confluence and Divergences
Confluence is evident at the $303.89 level, where the 38.2% Fibonacci retracement, 50-day MA, and prior resistance converge. This zone may act as a critical inflection point for trend continuation. Divergences include the KDJ overbought reading and RSI nearing 70, which may precede a pullback. However, strong volume and bullish engulfing patterns counterbalance these signals, suggesting a high probability of continuation if volume remains robust.

Summary
TSMC’s recent price action reflects a strong bullish bias, supported by confluence of moving averages, bullish candlestick patterns, and expanding volatility. While overbought indicators and RSI near 70 suggest caution, the alignment of Fibonacci levels and volume validates the uptrend. Key watchpoints include the $303.89 confluence zone and 50-day MA for trend confirmation, with potential for a 38.2%-78.6% Fibonacci extension if momentum holds. Divergences in momentum oscillators may precede a consolidation phase but are less likely to reverse the trend given the current volume dynamics.