Taiwan Semiconductor Manufacturing Company (TSM) is a key chip foundry, making processors used in artificial intelligence, smartphones, and data centres. A rising trendline on the daily chart has been in place since May 2025.
Over the past year, pullbacks have returned to this trendline, which sits around $335 to $340, and price has held there each time. During the March sell-off, the price again fell into that zone and then rebounded.
With the trendline still holding, price could move back towards the previous all-time highs just above $390. If price closes above that level on a daily basis, $400 becomes the next level to watch.
The view presented does not describe a plan to buy at current levels, as price is far from the trendline support. The focus is on possible selling pressure near $390 and $400, with the trendline area marked as a possible profit zone.
The trend remains upward unless there is a confirmed daily close below the trendline. Key levels mentioned are $335 to $340 for support, and $390 and $400 for resistance.
The primary structure we’re tracking is the ascending trendline that has supported Taiwan Semiconductor’s stock since May of 2025. This support level, now around the $335 to $340 area, successfully held during the market-wide selloff we saw in March. The bounce from that zone was strong, reinforcing the power of this bullish trend.
Recent data supports the strength leading into this test of the highs. We saw TSM report strong Q1 2026 earnings last week, with revenues up 25% year-over-year, largely due to continued demand for their advanced 3-nanometer chips for AI applications. Furthermore, industry-wide reports show global data center spending is forecast to increase another 20% this year, directly benefiting TSM’s order book.
For the coming weeks, as the stock approaches the prior all-time high near $390, we can look at buying put options. Specifically, May expiration puts with a strike price around $380 or $375 could offer a defined-risk way to profit from a potential rejection. This strategy positions for a pullback toward the established trendline support.
Another approach is to sell a bear call credit spread for the May monthly expiration. By selling the $395 call and buying the $405 call, we collect a premium and will profit if TSM’s stock price remains below $395 by expiration. This is a higher-probability trade that capitalizes on the stock failing to break out to new highs immediately.
The profit target for any bearish position should be the ascending trendline, currently near $335. We must remember how strong this support has been over the last year, so overstaying a short position as price approaches it is not advisable. We can respect the level that has repeatedly proven itself.
If we are wrong and buyers push the stock through the $390-$400 resistance zone on a confirmed daily close, the bearish trades must be closed. A breakout would invalidate the setup and signal the uptrend is accelerating. In that scenario, aggressive traders could then pivot to buying call options to participate in the next leg higher.
