After making a strong rally visible on its longer-term charts, MSFT shares are now stuck in a short-term consolidation pattern while investors pick a direction. Price formed a symmetrical triangle pattern visible on the 1-hour time frame, indicating that traders are waiting for a major market catalyst to trigger a breakout.
For now, the short-term exponential moving average is above the long-term exponential moving average on the 1-hour chart, suggesting that the ongoing uptrend might stay intact. After all, the consolidation pattern has followed a strong bullish run, suggesting that it could be a continuation signal.
MSFT Shares Outlook
A break above the $48/share level could confirm that MSFT shares are in for more gains, possibly until the resistance zones around $49-49.50/share. Further gains past that point could confirm that bullish pressure has strengthened.
On the other hand, a move below the triangle support around $47/share could indicate that a selloff is underway. This could still spark a longer-term market correction though, which might still keep the uptrend intact. However, a prolonged drop could lead to a move below $45/share and probably until support around $40-42/share.
Major event risks for US equities include the FOMC meeting minutes release in today’s US trading session, as this could set the tone for longer-term economic performance. Bear in mind that the US economy has printed a few disappointing reports for the past months, suggesting that the recovery is slowing down. If Fed officials echo this downbeat sentiment, US equities could take a hit from risk aversion.
On the other hand, reassuring remarks from FOMC members could keep US equities and MSFT shares supported, as this could signal that consumer spending and business investment might stay strong for the next few months. Any indication that the Fed is in no rush to hike rates could be positive for risk appetite.
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