SoundHound AI (SOUN) shares rose 21% on Thursday after the speech-generating artificial intelligence (AI) provider announced it had acquired AI software company Amelia for $80 million. The deal aims to expand the provider’s presence in the conversational AI space to new industries and brands.

However, the stock fell 5% in extended trading after SoundHound reported its quarterly results. Although both earnings and revenue beat estimates, the company still posted a wider GAAP net loss for the period compared to a year ago, which may have contributed to the after-hours weakness.

Below, we take a closer look at the specs in SoundHound’s chart and point out important price points to look out for.

Descending triangle in focus

Since reaching its 2024 peak in mid-March, SoundHound shares have fluctuated within a descending triangle, a chart pattern consisting of a trendline connecting a series of lower highs and a second horizontal line connecting a series of lows.

Although technical analysts typically consider descending triangles to be bearish, they can also signal the continuation of an uptrend when they form after an uptrend, which is the case in the SoundHound chart. In addition, the stock’s closing price on Thursday above the 50-day moving average on the highest trading volume since mid-July supports an upside breakout.

Upward price levels to watch

Looking ahead, investors should keep an eye on three key higher price levels that are likely to attract attention.

First, it is worth watching whether shares can break above the upper trendline of the descending triangle, which currently stands at around $5.75. A volume-backed move would likely act as a catalyst for further buying and could potentially trigger a short squeeze, given that more than 26% of the stock is held in short positions.

A breakout could see the stock test the $8.60 level, where sellers would like to take profits near a horizontal line connecting the June 2022 countertrend peak to a range of prices around this year’s high.

A more bullish move could result in a retest of the $15 area, where shares would likely face overhead resistance near a trading level that is in close proximity to SoundHound’s all-time high (ATH) from early May 2022.

Downward price levels to monitor

Despite the bullish technicals on the SoundHound chart, investors should keep an eye on the lower trendline of the descending triangle at around $3.50. A breakdown below the pattern will open the door for declines to the crucial support levels at $2.60 and $1.60.

After rising 21% during Thursday’s regular session, SoundHound shares fell 5% to $4.95 in after-hours trading.

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At the time of writing, the author does not own any of the securities mentioned above.