Technical analysis – Microsoft stock starts to ease after 7-month rally

Anthony Charalambous, XM Investment Research Desk

Microsoft stock logged a high of 141.61 after a seven-month uptrend, before shifting into a one-month sideways move. The stock found support from the 23.6% Fibonacci retracement level of the up leg from 94.48 to 141.61, of 130.50, as well as the 132.60 level, capped by resistance at 139.40.

Momentum has disappeared, as the MACD and trigger line have converged at zero, while the RSI although marginally above the 50-level, has been unable to break above previous highs. Furthermore, the 21-day simple moving average (SMA) has completed a bearish cross but has turned flat.

If the bears manage to push below the 50-day SMA initial pressure could come from the 132.60 support ahead of the 100-day SMA. If losses extend past the 100-day SMA and swing low of 130.50, which is the 23.6% Fibo, the price could drop to test the 38.2% Fibo of 123.60. More importantly, a continued fall could face some friction from a more durable support region of 119.00 – 118.00.

If the bulls climb on board, the initial barrier to breach could come at 139.40 tested multiple times, before the high of 141.61 unravels. A violation of the high could see the 149.45 resistance level brought into focus.

Summarizing, no clear signals suggest the end of the bullish trend. A close below 116.00 could turn the medium-term bias bearish-to-neutral.