Shares recorded their seventh consecutive higher closing price on Tuesday
Key findings
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Microsoft shares rose for a seventh straight day on Tuesday, with the latest gains coming after the tech giant raised its quarterly dividend by 10% and approved a $60 billion share buyback.
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The optimistic mood could continue into Wednesday after the technology giant and the world’s largest asset manager BlackRock jointly announced plans to launch a $30 billion AI infrastructure fund late Tuesday.
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The stock could potentially form a head and shoulders top, a chart formation that predicts a trend reversal from bullish to bearish.
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Investors should keep an eye on the key resistance levels on the Microsoft chart at $448 and $468 while also keeping an eye on the key support areas at $410 and $385.
Microsoft (MSFT) shares posted their seventh consecutive higher close on Tuesday, with the latest gains coming after the company raised its quarterly dividend by 10% and authorized a $60 billion share buyback.
The optimistic mood could continue into Wednesday after technology giant and the world’s largest asset manager BlackRock announced plans late Tuesday to launch a $30 billion artificial intelligence (AI) infrastructure fund. The fund aims to build data centers and energy projects to meet the growing demand for computing power from this technology.
The fund, which will mobilise a total investment potential of up to 100 billion US dollars including debt financing, includes Abu Dhabi-backed investment company MGX as a partner, while AI heavyweight Nvidia (NVDA) plans to contribute his expertise.
Below, we’ll take a closer look at Microsoft’s chart and turn to technical analysis to identify key price levels to watch out for.
Possible head and shoulders pattern
Since hitting a low just below the closely watched 200-day moving average (MA) in early August, Microsoft shares have been trading mostly sideways before resuming an upward trend earlier this month.
However, it is worth noting that the recent price increase is due to a decline in trading volume, which suggests a lack of participation from larger market participants.
In addition, the price could possibly form a head and shoulders top, a chart formation that predicts a trend reversal from bullish to bearish.
Microsoft shares rose 0.9 percent on Tuesday, closing at $435.15.
Looking ahead, it’s worth keeping an eye on four key price levels that investors are likely to be watching.
Resistance levels to watch
If shares continue to rise, they could initially face overhead resistance around $448. Traders who bought earlier this month could look for exit points there near a trendline that connects a period of tight consolidation in June to a smaller countertrend peak in July.
A move above this level could see shares retest the $468 area, where they would likely face selling pressure around their all-time high (ATH) from early July. A breakout through this area would invalidate a head and shoulders formation.
Support levels in the game
Given the stock price weakness, investors should keep a close eye on the $410 area, a spot on the chart just below the rising 200-day MA, where the price is supported by a horizontal line connecting a series of comparable trading levels from late January through this month.
Sustained selling could trigger a decline to around $385, a region where bulls could look for buying opportunities near the November swing high and August swing low. A break below this level would confirm a head and shoulders formation on Microsoft’s chart.
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