VSheart of the week – Microsoft

Microsoft in key support after a strong sell-off (mid-term technical analysis)

Source: CMC Markets

• Since its high of 349.66 printed on November 22, 2021, Microsoft has suffered a sharp drop of -15.4% to a low of 295.68 on Friday January 21, which is also a three-month low before the publication of the figures. fourth-quarter results Tuesday. , on January 25 after the US market closes.
• Microsoft’s current price action after its selloff last Friday has it hovering above key support at 292.30 which is defined by a confluence of elements; the lower boundary of the main ascending channel in place from the October 30, 2020 low, the 200-day moving average, the 38.2% Fibonacci retracement of the sequence of major impulsive bullish moves from the October 30, 2020 low to November 22, 2021 all-time high and the 1.618 Fibonacci expansion of the recent downward move from the November 22, 2021 high to the December 3, 2021 low projected from the December 29, 2021 high.
• The daily RSI oscillator hit an oversold level of 29.6%, its lowest level since December 24, 2018, suggesting that the recent bearish momentum is over; and a capitulation in price action may occur to initiate a potential rebound/recovery process.
• If key medium-term pivot support at 292.30 holds, Microsoft could see a bounce to retest intermediate resistance at 319.90 and a break above could see further upside towards 343.80 next. (the recent top of the range from December 13, 2021 to December 29, 2021).
• However, a daily close below 292.30 invalidates the recovery scenario for an extension of the sharp decline towards the next support at 274.90/266.70.