Coming back to Microsoft

 It was quite some time ago that I have an entry on Microsoft, it started with a conversation with my sister-in-law. As a result, there were 2 entries on Microsoft titled Microsoft.... and Microsoft follow-up at the beginning of this year. 

At the time, I estimated the support level of this counter at 267 and if fail, will reach 228 to 247. Since then, it reached and hover between 247 to 267 (give and take), rebounded upward. before another reversal by 14th August 2022.

Fig 1. Microsoft Weekly Chart

Since its reversal, Microsoft has been on continuation down trend. The chart demonstrating lower highs and lows and presently went below the 89-week moving average. Furthermore, its downward movement comes with gap, indicating momentum.

While it attempts to retest the said moving average this week, it remains below the support turned resistance. Not only that, it also fails to exceed the high of the previous bar. 

I believe that Microsoft have more downhill descend.

With the present set up, I can see 2 possible projections for Microsoft, one from top and the other from previous high, the more recent zig zag is more relevant to estimate its support level.

Using the larger zig zag set up, the support can be seen between 186 to 227. Is this a viable level? will Mcrosoft reach this level?

What if I use a shorter zig zag set up? The support seen from this level is between 219 to 248. Microsoft is close to reaching the higher end of this range.

Again, 247is a significant level as this is the previous low of Microsoft.  So breaking this line will make the longer term support more viable.

Microsoft follow-up

I wrote an entry on Microsoft around 2 weeks ago due to a discussion with my sister-in-law. In that entry I was quite unsure of the direction it was heading and mentioned that I might need to wait another few weeks to be clearer.

As the trend of Dow Jones, Hang Seng and Nikkei has so far been going the direction I have estimated, I have decided to look into Microsoft this week.

Fig 1. Microsoft weekly chart

There are more certainties this week as to which direction Microsoft is heading, it tested the joint 8 & 21-week moving average resistances and failed to penetrate through, since then it has retreated.

At the same time, it is quite clear that there is a golden cross between 8 and 21-week moving averages, confirming its short and medium trend downward, plus the gradient of 55-week moving average is turning more gradual, indicating a possible change in momentum. 

Personally, I feel that Microsoft is heading south, at least until the 21-week moving average touches the 55-week, by then Microsoft itself should be below the 55-week moving average mark.

The support levels I am looking at are 267.688 to 270.244 and if this does not hold, 228.833 to 246.519.

Microsoft....

 Chinese New Year is getting near and we are having a re-union. My brother and sister in-law arrived today and it is a pleasant feeling since it has been 2 years since we last gathered in Malaysia.

while we were sitting around the living room, my sister in-law talked about her recent investment adventure. She bought Microsoft during July last year and only to release it just this week as it was dropping, and somehow she regretted her action, hoping that Microsoft will return to the level she let go of her stocks so that she can buy it back.

It caught my interest and up-loaded the chart.

Fig 1 Microsoft Daily Chart

She mentioned that she uses the daily chart and she is particularly interested in a 200-day moving average. While I did not show it in the chart, the 200-day moving average was in fact supporting Microsoft on 24th January 2022. In another word my sister in-law sold at the bottom of the wave.

To be honest, I fiind it a little difficult to interpret this chart, mainly due to influence of the Dow Jones, which is on a down trend. So I have to put that influence aside and focus on this counter.

Base on my system, there is sign of reversal on 24th January 2022. While not really hammer with a small body, it nevertheless comes with a very long tail. I would have entered this trade based on my system.  What's troubling me is the subsequent 2 days, especially the second, while climbing up, they continued to turn red while gapping. It i not giving me confidence in this counter.

Moreover, the descend is steep since 29th December 2021, I am quite certain that it is in the process of changing its trend downward. So while it is going up, I tend to feel that this is likely a counter wave, it may stop aby the 55-day moving average.

If that is the case, we are seeing head and shoulder on Microsoft and more downside thereafter.

At the moment, I would say that there is not sufficient data on its direct. What of the weekly chart then?

Fig 2 Microsoft weekly chart

Surprisingly I am seeing a similar bar on the weekly chart. It is a color change with long tail pointing downward, it is however supported by 55-week moving average. The steepness of the descent is similar to that of the climb. I can't properly judge its trend, more observation needed.

The MACD on both charts have not shown any indication of divergence, therefore there is no signal telling the trader if it is reversing.

However, if I am to look at a much earlier incident, there is a similar situation on the 8th of March bar, the following bars descended below the moving average before climbing further up. So there is a chance that Microsoft have not yet reach its bottom, it has to "test" the support of 55-week moving average. 

The next 2 weeks are every important for Microsoft, t is even possible for Microsoft to confirm its change of trend if it breaks the 55-week moving average.