Here's What Microsoft Bulls Want To See To Spark A New Rally

Microsoft Corp MSFT spiked up 1.84% higher on Tuesday but rejected Monday’s high-of-day as resistance and dropped to near flat.

According to a report, the tech giant was negotiating an investment in OpenAI, backed by other venture firms. Microsoft intends to invest $10 billion in the company, which owns ChatGPT, an AI language chatbot that launched on Nov. 30, 2022, and had gained massive popularity.

Last week, Microsoft announced its own new AI model, VALL-E, which can imitate a realistic-sounding voice with emotion using a three-second audio sample. The company trained VALL-E's speech synthesis capabilities by leveraging the Meta Platform Inc META audio library called LibriLight.

Despite the news, Microsoft was trading mostly in tandem with the general market, which saw the S&P pop up briefly on Tuesday before trading mostly sideways in consolidation. Traders and investors might be waiting to see CPI data, expected from the Labour Department on Thursday at 8:30 a.m. before determining which way the market may go.

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The Microsoft Chart: Microsoft started trading in its most recent downtrend on Dec. 14, making a consistent series of lower highs and lower lows. Microsoft’s most recent lower high was formed on Jan. 3 at $245.75 and the stock bounced up off a support level near $220 on Friday, to print a lower low.

• On Monday and Tuesday, Microsoft traded higher but not at a level high enough to negate the downtrend. In order for the stock to negate the downtrend, Microsoft would either need to print a higher low over the next few days, or soar up to print a higher high.
• Microsoft has many gaps on its chart, with the closest gap falling between $231.24 and $237.40. If Microsoft crawls up to fill that upper gap, the stock may find resistance near the top of the range. If Microsoft prints a bearish reversal candlestick, such as a doji or shooting star candlestick, near that level, it could provide a solid entry point for bearish traders.
• Bullish traders want to see a retrace to print a higher low and then for big bearish volume to come in and drive the stock up toward $238, which would cause the stock to regain support at the 21-day exponential moving average. If that happens, Microsoft will confirm an uptrend and prove that the upper gap isn’t resistance.
• Microsoft has resistance above at $233.27 and $238.42 and support below at $227.18 and $219.16.

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Photo: Volodymyr Kyrylyuk via Shutterstock