Direxion Daily Semiconductor Bull 3X Shares SOXL reached new soaring heights recently as it surged to 25-month highs between March 1 and 8, a development that was aptly predicted by Benzinga on Feb. 29.

Following the peak, the ETF, a three-times leveraged fund comprising various semiconductor sector stocks, embarked on a period of consolidation, witnessing an 18% decline from the $56.99 high on March 8.

This consolidation phase led to a decrease in SOXL’s relative strength index (RSI) from around 75% to a more comfortable 56%. With this diminished RSI, SOXL now has room for a potential surge after the consolidation ends. However, the fate of this surge hinges on the performance of the fund’s major holdings, including Nvidia Corporation NVDA and Advanced Micro Devices, Inc AMD within their current upward trends.

AMD carries an 8.67% weight within the SOXL fund, while Broadcom, Inc AVGO holds an 8.59% weight. Nvidia is the ETF’s third-largest holding, accounting for 7.54% of the fund.

BofA Securities analyst Vivek Arya recently reaffirmed a Buy rating on Nvidia stock and raised the price target from $925 to $1,100, signaling a potential 21% upside. Arya’s optimism suggests there may be further room for Nvidia to climb.

While opportunities abound, it is crucial to acknowledge the flip side. Traders with a bearish outlook on the semiconductor sector or those anticipating a continued pullback can turn to the Direxion Daily Semiconductor Bear 3X Shares SOXS.

It’s worth noting that Direxion’s leveraged funds are tailored for short-term trading and are not intended for prolonged holding periods.

The SOXL Chart: Recent dips in SOXL were met with rebounds from near the $45 mark on Monday and Wednesday, a pattern also observed on March 5. These consistent bounces suggest strong support at this level, culminating in the formation of a triple bottom pattern in the ETF.

• Wednesday’s trading indicated a possible bottom as SOXL attempted to form a hammer candlestick on the daily chart. A bullish confirmation on Thursday could see the ETF surpass Tuesday’s high, potentially reversing its recent downtrend.
• A break above Tuesday’s high would also signify a bullish departure from a rising channel pattern in which SOXL has traded since Dec. 14.
• Bearish traders, on the other hand, will look for SOXL to dip below the $45 mark, invalidating the triple bottom pattern and potentially intensifying downward pressure.
• SOXL faces resistance levels at $50 and $55.94, with support resting at $44.97 and $41.60.

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