Watch These MP Materials Price Levels After Apple, DOD Investments Send Stock Soaring

MP Materials (MP) shares remain in focus after soaring 20% yesterday on news that Apple (AAPL) plans to invest $500 million in the rare earths firm.

The company will supply metals to Apple as part of the tech giant’s pledge to spend more than $500 billion in the U.S. over the next four years. The news of the Apple commitment came just days after the Department of Defense took a 15% stake in the US’s only rare earths producer as Washington makes becoming less dependent on nations like China for rare earths a top priority and a national security issue.

MP Materials shares have surged nearly four-fold since the start of the year and are up 70% this month alone. The stock was down 1.5% at around $57 in afternoon trading Wednesday.

Below, we take a closer look at MP Materials’ chart and apply technical analysis to identify major price levels worth watching out for.

Flag Pattern Breakout

After hitting their June peak, MP Materials shares retraced within a flag toward the 50-day moving average (MA). More recently, the price staged a volume-backed breakaway gap above the pattern, accelerating the stock’s uptrend.

While the relative strength index confirms bullish price momentum, it also flashes a reading above 80 to signal extremely overbought conditions.

Let’s analyze MP Materials’ chart to forecast where the stock’s move higher may be headed next, and also point out two major support levels worth watching during profit-taking.

Where to Next for MP Materials Shares?

Investors can use the bars pattern tool to forecast a near-term bullish price target for the stock. When applying the technique to MP Materials’ chart, we extract the bars comprising the impulsive move higher that preceded the flag pattern and overlay them from last Thursday’s breakaway gap.

The analysis, which forecasts a potential continuation move, projects a target of around $85. In terms of duration, the prior trend analyzed played out over 15 trading days, meaning the current strong move higher could last until the end of this month if price action rhymes.

Major Support Levels Worth Watching

During profit-taking in the stock, investors should initially watch the $39 level. This area on the chart could provide support near last month’s high, which also marks the flag pattern’s peak.

Finally, a more significant retracement in MP Materials shares could see the price revisit lower support around $30, a level currently sitting just above the 50-day MA. Investors may seek entry points in this region near the base of the flag pattern and April swing high.

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As of the date this article was written, the author does not own any of the above securities.