Microsoft shares have been showing signs of uptrend exhaustion, as a reversal pattern seems to be forming on its long-term chart. A double top pattern is emerging on the daily time frame, after price failed to make a break past the resistance at $50/share.
In addition, the short-term 100 SMA has crossed below the long-term 200 SMA, suggesting that a downtrend is starting. Price has yet to break below the neckline of the double top formation at $40/share before confirming the potential drop to as low as $30/share.
Stochastic is pointing down, indicating that sellers are in control of price action and that further declines are possible. RSI is also moving lower but is nearing the oversold area, which might draw buyers back in. If so, price could bounce off the support at $40/share and make another attempt to break past $50/share.
Microsoft Shares Outlook
Microsoft shares failed to get a boost from the launch of another Windows 10 build for the PC. This version features Microsoft’s new browser, Edge, which now has its branding inside the operating system. It also includes further improvements to Cortana, including a new theme and integration with Office 365.
In addition, weak risk appetite in the financial markets has dragged US equities down. Traders are pricing in the potential repercussions of the Greek IMF default on global financial trading, with some anticipating potential market crashes in the euro zone area.
Equity traders are now waiting for the release of the US jobs report for more clues on overall economic performance. Strong hiring could keep spending supported, which would be good for company revenues. This could also put the Fed closer to a rate hike in September.
Earnings reports from companies are also lined up in the coming weeks, which could mean volatility for the stock market. Strong figures from Microsoft could allow its stock to stay afloat.
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