Technical Analysis - Microsoft stock near all-time high prior to earnings publication

Microsoft stock price is withdrawing slightly from its freshly reached all-time high of 310.84, but the outlook appears to remain strongly bullish. Reinforcing this view are the advancing simple moving averages (SMAs), which seem to be shielding the positive structure.

The short-term oscillators are indicating that positive momentum is starting to wane. The MACD, far above zero and its red trigger line, is starting to ease, while the RSI is heading lower in bullish territory after deflecting off the 70 overbought level. The stochastic oscillator has yet to confirm negative powers as having taken the lead, but its %K line has pierced below the 80 level and is starting to endorse a price pullback in the stock.

In a negative scenario, sellers face immediate downside friction at the 310.84 level. Retreating beneath this barrier, the price could encounter a tough zone of support from the 50-day SMA at 298.00 until the low of 292.40. Should the stock produce a deeper retracement, the price may meet the 100-day SMA at 287.00, while persisting downward forces could drive the price towards the support base of 275.00-280.00.

If buyers re-emerge, prompt resistance could stem from the all-time high of 310.84 and the nearby upper Bollinger band at 316.28. Moving higher, the price may aim for the 321.38 level, which happens to be the 161.8% Fibonacci extension of the down leg from 305.59 until 280.00. Additional buoyancy could then pilot the stock price towards the 330.00 handle.

Summarizing, Microsoft’s stock is sustaining a bullish bias above the SMAs and the 292.40 low. That said, a price correction extending below the 280.00 trough could bolster negative forces and a more severe price drop.

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