Since our last look at the Microsoft share on March 5 (link: Is it time to buy Microsoft? Yes and No.), a lot has changed. The stock has reached the structural level of US$124.20, continuing the bull market which started after Christmas 2018. The question now is whether the bulls can continue to dominate events or whether they will take a breather.
The bull market has migrated gradually upwards at a steady angle. The market has slowly worked its way up along its upward trend line. With a final push, the market crossed the US$124 area on Tuesday. This made Microsoft one of the stocks with the most reliable performance so far this year. At over US$125.80, the share showed a new all-time high this Wednesday.
Now there is a risk of profit-taking by investors who have earned good money with this stock so far. This could lead to a correction in Microsoft shares.
The MACD has fluctuated widely and has been well above zero for some time. The histogram is now showing positive swings again after a negative phase.
The area around the US$124 region is likely to be decisive. If the bulls can defend this, a resistance band could wait between US$127.80 and US$129.30, which could slow the market. If the market makes the jump here, the path could even be opened to the US$137.60 area, where another resistance level could wait.
However, if the bulls pull out and the market starts to correct, then the uptrend line could be the first port of call as support for the market. If this is not strong enough, a structural band between US$119.50 and US$118.40 could provide further support for the market.
If the market falls through here as well, there could be further support for the market in the US$113.80 and US$110 areas.
MSFT.US Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
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