Taiwan Semiconductor (NYSE: TSM) is on a strong upward trend. Analyzing the daily Elliott Wave structure gives us insight into potential targets and short-term corrections ahead. TSM’s rise began from a low of $134 in April 2025. It has moved through several waves: Wave ((1)) peaked at $248, Wave ((2)) dipped to $223, Wave ((3)) rose to $311, and Wave ((4)) found support at $266. Now, Wave ((5)) has reached new heights. This upward movement may continue as long as the price stays above $266. If that holds, we could see prices move into the $321–$338 range, indicating the end of the larger Wave III rally. After completing Wave III, TSM will go through a daily Wave IV correction. This correction will feature either 3, 7, or 11 swings. It presents a good buying opportunity before the bullish trend picks up again. Market participants should watch for entry points after these corrections. Using Elliott Wave strategies and proprietary systems can help spot high-probability areas for potential gains. The rally starting from the $134 low in April 2025 seems to be nearing its peak. Positive momentum from the Q3 earnings call and news on the 1.4-nanometer process have boosted this climb. We are targeting the $321 to $338 zone as the likely peak for this wave. For traders looking for one last surge, buying near-term call options that expire in January or February 2026 could be a smart move. Aiming for strike prices around $325 or $330 allows you to take advantage of a final push toward this target zone. However, we should be cautious, as implied volatility is high, making these options pricier than a few weeks ago. As the stock approaches this target area, we should shift to strategies that can benefit from the expected correction. Buying put options is a direct strategy to profit from a price drop once the upward momentum slows. Alternatively, selling out-of-the-money call credit spreads offers a safer way to bet against prices moving past $340. This perspective is backed by recent market data, with Wall Street aligning around a $330 price target for early 2026. We have also noticed implied volatility for at-the-money January 2026 options rising above 45%, indicating the market is preparing for a substantial price movement. This resembles the price behavior in late 2023, which led to a 15% pullback before the next big rally. This upcoming pullback is seen as a strategic buying opportunity for the next major upswing. Once we identify the bottom of the correction, we will aim to establish new bullish positions using longer-dated call options expiring in September 2026. This strategy will enable us to re-enter the market at a lower cost and ride the next major wave toward new all-time highs.

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