Microsoft's Stock Is At A Critical Moment: Multi-Year Bullish Trend At Risk

Microsoft Corp. MSFT shares are trading slightly lower Tuesday as the stock is bouncing off a key support level. The company is set to report its quarterly earnings after Tuesday’s closing bell.

Microsoft was down 1.72% to $291.27 at the time of publication.

See Also: Will Microsoft Continue Its Rebound?

Microsoft Daily Chart Analysis

• Shares look to be bouncing off the trendline in what traders call an ascending triangle pattern. The stock is nearing the end of the pattern and if the price continues to trade above the trendline and can move beyond the $305 level for a time, it may see a further bullish move in the future.
• The stock trades below the 50-day moving average (green) but has crossed above the 200-day moving average (blue). This indicates the stock is in a period of consolidation. The 50-day moving average may act as an area of resistance, while the 200-day moving average may hold as support.
• The Relative Strength Index (RSI) has been fading lower the past few months and sits at 29. This is slightly into the oversold region and is showing the stock is seeing many more sellers than it is buyers. If the RSI remains in the lower range, the stock may see a bearish push in the future.

What’s Next For Microsoft?

Microsoft is in a period of uncertainty as the stock sits slightly above the higher low trendline, but is seeing more selling pressure than buying pressure according to the RSI.

Bullish traders want to see a bounce off the higher low trendline and for the RSI to start climbing back higher once again. This could cause the stock's multi-year bullish trend to continue.

Bearish traders want to see the stock crack below the support trendline and for the RSI to remain in the oversold region. This could cause a bearish trend to form, leading to a possible strong downward move for the stock.

Photo: Courtesy of lkalamujic on Flickr