Here's a brief analysis of the potential for a Head and Shoulders Pattern forming in MSFT
Thanks for having a look at my take on this.
Let me know how it goes and how you view these recent movements
And if this analysis helps, I'd really appreciate a like, it lets me know I'm doing useful work.
Building upon my recent discussion of a Cup and Handle or a Double Top
I'm having a look at how each of these scenarios will play out in constituent stocks, especially with earnings season being underway.
Head and Shoulders
MSFT has recently broken above it's hard resistance of $217 which may have put to bed some investor's fears of future downside. However when looking at the weekly chart:
It can be seen much clearer that this past week has formed a Spinning Top above 216 which is a weak break from the Head and Shoulders pattern formed. This has been caused by a failure to break $225 which would have truly confirmed a rally to higher prices. Furthermore, price action over the last month has failed to regain ground into the Parallel Channel that brought MSFT out of its Covid dip, leading to a stall in momentum seen clearly in the Weekly Chart. This is likely leading to Investors desiring a better buying opportunity in the future.
A break below $220 today will likely lead to fear among investors and may cause prices to test the relatively strong Support of $217. It is unlikely this support of $217 will be breached but a failure to move substantially away from $217 at the close may lead to fear going into next week where this pattern will either be confirmed or debunked.
Verdict
It is unlikely MSFT will be hit down anywhere close to Covid Levels however potential to hit $200 is present and $180 if future negative fundamentals come into play. Be cautious and wait for a serious break of $217 to short. The next support at $210 is even stronger and without a serious surprise hit to earnings, it is unlikely to drop below this. Therefore $210 could act as a buy signal which may cause a move back above $217 and further.
Best of luck and Stay Disciplined
Thanks for having a look at my take on this.
Let me know how it goes and how you view these recent movements
And if this analysis helps, I'd really appreciate a like, it lets me know I'm doing useful work.
Building upon my recent discussion of a Cup and Handle or a Double Top
Head and Shoulders
MSFT has recently broken above it's hard resistance of $217 which may have put to bed some investor's fears of future downside. However when looking at the weekly chart:
It can be seen much clearer that this past week has formed a Spinning Top above 216 which is a weak break from the Head and Shoulders pattern formed. This has been caused by a failure to break $225 which would have truly confirmed a rally to higher prices. Furthermore, price action over the last month has failed to regain ground into the Parallel Channel that brought MSFT out of its Covid dip, leading to a stall in momentum seen clearly in the Weekly Chart. This is likely leading to Investors desiring a better buying opportunity in the future.
A break below $220 today will likely lead to fear among investors and may cause prices to test the relatively strong Support of $217. It is unlikely this support of $217 will be breached but a failure to move substantially away from $217 at the close may lead to fear going into next week where this pattern will either be confirmed or debunked.
Verdict
It is unlikely MSFT will be hit down anywhere close to Covid Levels however potential to hit $200 is present and $180 if future negative fundamentals come into play. Be cautious and wait for a serious break of $217 to short. The next support at $210 is even stronger and without a serious surprise hit to earnings, it is unlikely to drop below this. Therefore $210 could act as a buy signal which may cause a move back above $217 and further.
Best of luck and Stay Disciplined
