IBM stock seems to be on the verge of a longer-term downtrend, as a head and shoulders pattern formed at the top of the uptrend on its daily chart. Price appears to have broken below the neckline already, indicating that sellers are in control.
However, stochastic is turning from the oversold zone, which means that buying pressure could return sooner or later. At the same time, a bullish divergence can be seen, with price making lower lows and stochastic drawing higher lows.
IBM Stock Outlook
Prospects for the company seem strong though, as IBM has recently built a cloud ecosystem in its goal to provide a collaborative approach to independent software vendors. “This project is part of our ongoing commitment to the local market. It will enable these companies to grow without large capital costs. This is a real bonus for Egypt’s fast-growing entrepreneurial clusters, which often lack funding or physical IT infrastructure,” said Amr Talaat, the Country General Manager of IBM Egypt.
Earlier this month, Zitouna Bank in Tunisia has selected IBM to core banking platform and develop new services for customers. This drive IBM stock prices slightly higher but failed to break the ongoing selloff.
A break below the $180/share mark could lead to a test of the $170/share level for IBM stock. On the other hand, a bounce from its current levels could mean a rally up to the previous highs near $190.00/share.
The shorter-term simple moving average is still moving above the longer-term moving average for now, indicating that there is a potential for more gains. Once the 100 SMA crosses below the 200 SMA though, the downtrend could be cemented, which means more losses for IBM stock.
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