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Key Takeaways
- Marvell Technology shares plunged Friday after the chip designer issued a sales forecast below Wall Street’s expectations.
- The stock recently broke down below an uptrend line extending back to the April low before staging a retest of the indicator leading into the company’s quarterly results.
- Investors should watch critical support levels on Marvell’s chart around $62, $56, and $50, while also monitoring a vital overhead area near $78.
Marvell Technology (MRVL) shares plunged Friday after the chip designer issued a sales forecast below Wall Street’s expectations.
The company said it expects third-quarter revenue of $2.06 billion, give or take 5%, with that figure slightly below analysts’ estimates. CEO Matthew Murphy said in the company’s earnings call that he expects data center sales to be flat on a sequential basis, though he added that he anticipates stronger performance in the fourth quarter.
Shares of Marvell were down nearly 17% in recent trading, and have lost more than 40% of their value since the start of the year amid concerns the company could struggle to live up to investors’ high expectations of AI-driven upside, coupled with uncertainty about U.S. chip restrictions on China sales, which represent a large portion of Marvell’s revenue.
Below, we break down the technicals on Marvell’s chart and identify post-earnings price levels worth watching out for.
Breakdown Below Uptrend Line
Marvell shares earlier this month broke down below an uptrend line extending back to the April low before staging a retest of the indicator leading into the company’s quarterly results.
Although the recent move saw the relative strength index cross back into bullish territory, selling resumed Friday following the company’s light outlook.
It’s also worth pointing out that the stock has failed to reclaim the closely watched 200-day moving average after gapping below the indicator in March, indicating the bears remain in control of the longer-term price action.
Let’s point out three critical support levels to watch on Marvell’s chart if the shares continue losing ground, and also identify an overhead area worth monitoring.
Support Levels to Watch
The first lower level to watch sits around $62. This area may provide support near a range of corresponding trading activity on the chart stretching all the way back to the December 2023 high.
A close below this level could see the shares fall to support near $56. The shares may find buying interest at this location around last year’s January and August troughs, which also closely align with price action on the chart this year between April and May.
A failure to successfully defend this level may lead to retest of lower support at $50. Investors could look to buy shares in this region near the psychological round number situated in close proximity to prominent lows that formed on the chart in December 2023 and April this year.
Overhead Area Worth Monitoring
During recovery efforts in Marvell shares, it’s worth keeping track of how the price responds to the $78 area. The shares could run into selling pressure at this level near a trendline that connects a series of peaks on the chart from May 2024 to August this year.
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