Core Scientific (CORZ) shares soared this week following reports Nvidia (NVDA)-backed CoreWeave (CRWV) is in discussions to buy the Bitcoin mining and hosting provider, after an unsuccessful attempt about a year ago.

A transaction could be finalized in the coming weeks,The Wall Street Journal reported, citing people familiar with the matter. The two companies already have a longtime partnership that includes billions of dollars in contracted commitments, the report noted.

Core Scientific shares were up 3% in recent trading after jumping 33% Thursday, leaving the stock near a record high set last November. They've climbed about 80% over the past 12 months, with investors cheering the company’s strategic shift to capitalize on the AI boom.

Below, we take a closer look at Core Scientific’s chart and apply technical analysis to point out crucial price levels worth watching.

Core Scientific shares have formed a classic cup and handle pattern over the past six months before staging a decisive breakout above the formation’s top trendline in Thursday’s trading session.

The bullish move occurred on the highest daily volume since the company relisted its shares on the Nasdaq in January last year, signaling active participation from larger market participants.

While recent price momentum has driven the relative strength index (RSI) into overbought territory, the indicator remains below its mid-2024 peak following a strong trend higher.

Let’s identify two crucial overhead areas on Core Scientific’s chart to watch and also locate several vital support levels worth monitoring during potential profit-taking in the stock.

The first overhead area to watch sits around $18.65. This area on the chart could attract significant attention near last November’s peak, which also marks the stock’s all-time high (ATH).

If the shares move into price discovery, investors could project a bullish target by applying the measured move technique, also known as the measuring principle. Applying this method to Core Scientific’s chart, the percentage change of the cup and handle’s “cup” is added to the pattern’s top trendline value. That would be a $110% increase to $13, resulting in a target of $27.30, implying 67% upside from Thursday's closing price.

During profit-taking events, investors should initially monitor the vital $13 level. Those who prefer to avoid chasing breakouts may look for retracement entries near the cup and handle’s top trendline, which may flop from prior resistance into future support.

Selling below this level could open the door for a more significant correction to around $10.50. Core Scientific shares could attract buying interest in this location near the 50-day moving average and a horizontal line that connects a range of trading activity on the chart extending back to June last year.

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