Microsoft Corp. (NASDAQ: MSFT) has been in a recovery mode since May 12th and continued a bit higher yesterday. Overall though, the stock remains below the downside resistance line taken from the high of April 5th, and thus, we will treat the recovery as a corrective wave before another leg south.
Even if the recovery continues for a while more, investors may decide to liquidate again from near the 274.00 zone, marked by the high of May 10th, or the aforementioned downside line. This could result in a slide towards the 256.00 zone, marked by the low of May 16th, or the low of May 12th, at 250.00. Now, if neither barrier is able to halt the fall, a break below 250.00 would confirm a forthcoming lower low and may set the stage for declines towards the 239.00 territory, which provided support May 12th and 19th, 2021.
Taking a look at our short-term oscillators, we see that the RSI just poked its nose above its 50 line, while the MACD, although negative, lies above its trigger line. Both indicators suggest that there might be some more recovery before the next leg south.
Now, in order to get confident that there might be larger advances, we would like to see a clear break above 280.00, a resistance near the high of May 6th. This could initially target the 291.00 zone, which provided strong resistance between April 12th and May 4th, but if market participants are not willing to sell there, then we could see them climbing towards the 303.65 level, marked by the high of April 7th, or the 305.65 zone, marked by the inside swing low of April 1st.
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