Stock of the day: Microsoft

By Tomasz Wisniewski|

Published: December 20 2023, 06:41 GMT+0

Stock of the day: Microsoft

In today’s focus, we’re analyzing Microsoft, an example of technical trading on the stock charts. Currently, Microsoft’s trajectory is underscored by a significant pattern and subsequent movements that are key to understanding its potential future direction.

Looking at the chart, the prominent feature is a wedge formation, observed in the middle of the year, that culminated in an upward breakout. A critical development in November was the breach of the wedge’s peak, around $365. This level, initially a resistance, has transitioned into a pivotal support zone.

Subsequent to this breakout, Microsoft’s price action evolved into another pattern – a pennant, delineated with blue lines. Given the historical context, the likelihood leans towards another breakout, this time to the upside. This expectation aligns with the stock remaining robustly above the key support level, and is further bolstered by the broader market context. The general sentiment across indices is one of optimism, with markets trending upwards. This broader market positivity enhances the likelihood of Microsoft not only maintaining its position above the crucial $365 support but also potentially reaching new heights.

However, it’s essential to consider alternate scenarios. Should Microsoft’s stock price descend below the orange support line, this would represent a notable shift in market sentiment and could potentially trigger a sell signal. Such a move would be contrary to the current bullish trend, indicating a change in investor outlook and market dynamics.