Microsoft stock has been a steady gainer over the years since Satya Nadella took over. Will this stock continue to move up and is it a good investment?
In this article, we will use technical analysis to study the trend of this stock.
The charts below that I will show you is taken as of March 21 2022. Things may change rapidly with the stock in the near future. So do take that into consideration.
First of all, the daily chart of MSFT shows that this stock is trying to bottom. The stock may be forming a double bottom chart pattern. This is a popular bottoming pattern and if the stock manages to move back above the highs of the middle of the pattern, then we could see the stock moving up.
As long as the stock stays above $269, then this would really be a bottom and this could be a good time to invest in the stock again.
For stock traders, the presence of a double bottom formation may give us a good trade. The stock has also broken above a daily downtrend line which is also a sign that it may bottom. If you find the stock too expensive, you can try options and debit spreads to help you go around the cost issue.
Watch the downtrend line carefully. As long as the stock stays above this downtrend line, then it is likely to continue to move higher.
Microsoft stock has gone back above its 20 MA and 50 MA. This is a good sign that the stock may be bottoming. However, it is near the 200 MA and therefore we could see some resistance above. But if the stock is able to go back above the 200 MA then we could really see the stock making a bottom and move up.
The second thing that I would like to show you is the weekly chart of Microsoft stock. The stock despite the ups and downs has been in a weekly uptrend. It is chugging higher over the years.
Notice how the stock seem to be able to find support at the rising weekly 50 MA. The last two times, the stock was able to bounce back up from the 50 MA. If you look carefully, the stock is now sitting at the rising weekly 50 MA.
So if history repeats itself, then we could potentially see the stock bounce back up. So indeed, this could be a good time to invest some money into the stock.
Let us take a look at the monthly chart of Microsoft stock as well. The stock is even in a monthly uptrend.
Notice how the stock has been above the rising monthly 20 MA all this time. The last two times that the stock move close to the rising 20 MA, it moved back up. It is also very near the rising 20 MA now and quite ripe for a bullish reversal back up.
The stock formed a monthly bottoming tail last month and this month it is also in the process of forming a monthly bottoming tail. The bottoming tail is a bullish reversal candlestick. If the stock manages to go back above the highs of the last month's bottoming tail it could be moving higher.
For those who are a bit patient, you might want to wait for the conclusion of this month's trading to see if another monthly bottoming tail forms. If the stock is able to move back above this month's bottoming tail, then it is also a good time to buy the stock for a longer term investment.
We have now look at 3 time frames, the daily, weekly and monthly and all three seem to be very positive for the stock. Hopefully this analysis will help you to make a better decision when it comes to trading or investing in this blue chip stock.
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