ON Semiconductor Faces Pressure as Supply Outstrips Demand

Technical Analysts Identify Potential Downtrend

Currently, ON Semiconductor Corporation ON is experiencing more shares available for sale than there are buyers, which is leading to a decrease in stock price.

This situation raises the possibility of a new downtrend forming, prompting our team of technical analysts to select it as the Stock of the Day.

Often, technical analysis can seem overly complicated. At its core, however, it is simply the study of supply and demand in the market.

When supply equals demand, traders can buy or sell shares without issue. However, if supply exceeds demand, sellers must lower prices to attract buyers, resulting in a downtrend.

Examining Support Levels

Price levels with higher demand than supply are referred to as support levels. Downtrends typically pause or reverse at these points.

The $61 mark has served as a support level for ON Semiconductor previously, as indicated on the chart. Notably, downtrends halted at this level in October 2023 and April 2024.

What Happens When Support Levels are Tested?

After reaching a support level, stocks sometimes rally. This can occur when buyers recognize the opportunity and begin to worry about rising prices as demand picks up.

These buyers act quickly, raising the prices they’re willing to pay. As more people notice this shift, a bidding war can ensue, driving prices higher, which has occurred at $61 previously for ON Semiconductor.

However, the crucial $61 support level seems to have been compromised, with the stock closing below it.

This break may indicate that the buying interest that once established this support has diminished, possibly resulting in sellers needing to lower prices anew to attract buyers. If this trend continues, a new downtrend for ON Semiconductor could follow.

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