Microsoft Corp. (NASDAQ: MSFT) traded higher yesterday, after hitting support slightly above the 276.00 barrier, marked by the low of May 2nd. However, the advance was stopped near the key resistance zone of 291.00, which has been preventing the stock from climbing higher since April 12th. Overall, the stock looks to be forming an inverted “Head and Shoulders” formation, but we would like to wait for the pattern’s completion before we get more confident on further upside.
A clear break above 291.00 could confirm the completion of the formation and may initially pave the way towards the 297.00 zone, marked by the low of April 6th, the break of which could allow extensions towards the 303.65 or 305.65 levels, marked by the high of April 7th and the inside swing low of April 1st respectively. A move above the latter level could carry larger bullish implications, perhaps setting the stage for advances towards the 315.00 zone, marked by the high of April 4th, the break of which could open the way towards the 330.00 zone, marked by the inside swing low of January 3rd.
Turning our gaze to our short-term oscillators, we see that the RSI rebounded and crossed back above tis 50 line, while the MACD, already above its trigger line, has just poked its nose above its zero line. Both indicators suggest that the stock has already started gaining upside speed, but we stick to our guns that a break above 291.00 is needed for the short-term outlook to become brighter.
On the downside, we would like to see a clear break below 270.00 before we start examining the bearish case. This level marks the head of the H&S formation and thus, its break will cancel the pattern and may signal that the prior downtrend is back in force. The first stop may be at 263.00 marked by the inside swing high of April 27th, 2021, the break of which could aim for the 257.29 zone, marked by the low of June 21st, 2021. If that barrier doesn’t hold either, then a break lower could allow declines towards the low of June 3rd, 2021, at 243.00.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure.
Copyright 2022 JFD Group Ltd.