Advanced Micro Devices, Inc. (AMD) stock fell more than 3% on Tuesday morning, giving up some of its gains from earlier this week. During the fourth quarter of last year, shares fell about 45% following a bearish earnings report that signaled an end to the cryptocurrency boom. Revenue guidance also came in below consensus estimates at $1.4 billion to $1.5 billion (consensus was $1.59 billion).

Despite the fourth quarter decline, the stock ended last year with a gain of about 80% – leading the S&P 500 index. The company continues to gain market share from Intel Corporation (INTC) but could face ongoing headwinds from the challenging macroeconomic environment, continuing deterioration in cryptocurrencies, its lofty valuation following a strong 2018 performance and expected growth moderation.

That said, traders should keep an eye on several potential bullish catalysts over the coming months. The improving domestic economy could boost demand for chips, while a resolution to the trade war with China could open the door to greater international growth.

Technical chart showing the share price performance of Advanced Micro Devices, Inc. (AMD)

From a technical standpoint, the stock broke out from its descending triangle earlier this week but moved back into the pattern during Tuesday's session. The relative strength index (RSI) remains neutral with a reading of 53.63, while the moving average convergence divergence (MACD) experienced a small bullish crossover. These indicators suggest that the stock has room for a potential breakout.

Traders should watch for a breakout from the descending triangle's upper trendline at around $20.00 and the 50-day moving average at $19.57. If that occurs, the stock could retest reaction highs at around $23.50. If the stock breaks back into its descending triangle pattern, traders could see a move to retest lows at around $16.00. A breakdown from those levels could lead to fresh lows.

The author holds no position in the stock(s) mentioned except through passively managed index funds.