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This chip stock is set to surge in the next month, technical analyst says

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This semis stock is set to surge in the next month, technician says

Semis stocks have broken out this month.

The SMH semiconductor ETF rocketed 12% in June, its best performance since 2010, led by major rallies in Nvidia, Micron Technology and Analog Devices.

It's time now for one of the middle-of-the-road performers to surge, according to Todd Gordon, founder of TradingAnalysis.com. He says Texas Instruments, which has paced the SMH ETF's June gain, could break out to new highs over the next month.

"Here's the chart," Gordon said on CNBC's "Trading Nation " on Thursday. "We've begun a little bit of a consolidation here and as we zoom in, you're going to see that we have a little bit of a continuation head and shoulders … and that does indicate that we'd expect uptrend resumption."

A reverse head and shoulders pattern forms when a stock makes a low, a lower low and then a higher low. It suggests the reversal of a bearish trend. Texas Instruments' "right shoulder," formed in May, could signal that reversal.

"If we zoom in there a little bit, you can clearly see that the breakout level in TXN is going to be just south of $120 here," said Gordon. "We have earnings coming up [in late July]. I'd like to put a trade on in anticipation of a break of that downtrend line right there."

The options market is pricing in an expected upside move to $125.53 on earnings. To ride that potential move higher, Gordon is buying the July 26 expiration 116 call and selling the 124 call for $3.06. This is a bet Texas Instruments can climb as high as $124 by that expiration date. It would knock out the old January 2018 record high of $120.75. It was trading at $116.50 in Friday's premarket.

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