Microsoft Shares Testing Falling Channel Resistance

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Microsoft Shares Testing Falling Channel Resistance

Microsoft Shares Testing Falling Channel Resistance

Microsoft shares could be due for another leg lower, as prices are testing the top of the falling channel on its short-term chart. Price is also drawing resistance from the 200 SMA, which has held as a dynamic inflection point in the past.

Stochastic is moving down from the overbought zone, reflecting a pickup in selling pressure. Similarly, RSI is starting to turn down from the overbought area, suggesting that the downward momentum could still pick up. This could take Microsoft shares to the channel support at around $43/share.

Meanwhile, the 100 SMA is still below the 200 SMA, confirming that the downtrend is likely to carry on. An upside break past the channel resistance around $46/share, however, could mean that a reversal is in order.

Microsoft Shares Outlook

Prices of Microsoft shares got a boost from news of restructuring, as the company wrote off all of Nokia’s value from its books and also reduce its headcount by 7,800 or roughly 6%. According to CEO Satya Nadella, the company would focus on first-party devices going forward.

Stock market analysts retained their hold rating for Microsoft shares after the release of Windows 10, although some warned that the free releases might hurt future earnings. In particular, this could weigh on new PC sales and be negative for its chipmaking partner, Intel.

“Based on early feedback from some early PC OEMs, they’re not expecting much of a big jump [in PC sales], and the reason is Microsoft offering free Windows 10 upgrades. The view now in the industry is the effect from the Windows 10 launch will be fairly muted, at least when it comes to new PC purchases,” Gartner analyst Mike Hung told Business Insider.

With that, MSFT could face further downside pressure as some analysts also lowered their earnings forecasts for the company.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.