Key Takeaways
Microsoft (
MSFT
) shares surged in extended trading Wednesday after the Windows maker issued fiscal
third-quarter results and guidance that topped Wall Street’s expectations
. boosted by strong growth in its cloud business.
CEO Satya Nadella said the company’s Intelligent Cloud segment, which houses its Azure cloud computing platform, continues to benefit from businesses’ need to expand output, reduce costs and accelerate growth, adding that Microsoft continues to innovate across its AI stack.
While Microsoft shares have risen 15% from their April low, they remain down 6% since the start of the year as of Wednesday’s close. Like other big tech names, concerns about sweeping tariffs and a reduction in
AI spending
continue to weigh on investor sentiment.
Microsoft shares rose nearly 7% to around $423 in after-hours trading.
Below, we take a closer look at Microsoft’s chart and use
technical analysis
to identify key price levels worth watching.
Successful Falling Wedge Retest
Following a successful retest of the top trendline of a
falling wedge
pattern, Microsoft shares staged a sharp move higher leading into the tech giant’s earning’s report, potentially setting the stage for a longer-term bullish reversal.
It’s also worth noting that the shares on Wednesday registered their highest
trading volume
in three weeks, suggesting that larger market participants, such as
institutional investors
and hedge funds, had positioned for a significant post-earnings move.
Let’s analyze Microsoft’s chart to identify two key overhead areas to watch, while also pointing out crucial
support levels
worth monitoring during future retracements.
Key Overhead Areas to Watch
The first overhead area to watch sits at around $442. This level may provide resistance near a trendline that roughly links several
peaks
that formed on the chart between September and January.
A decisive close above this level could see Microsoft shares make a move up toward the $468 area. Investors who have
accumulated shares
at lower price may look for
profit-taking
opportunities in this location near the stock’s
record high
set in July last year.
Crucial Support Levels Worth Monitoring
During future retracements in the stock, it’s worth tracking the $395 level near Wednesday’s closing price. This area on the chart has provided selling pressure over the last month around the late March
countertrend
high and mid-April peak following the stock’s initial
breakout
from the falling wedge pattern.
Finally, a deeper
pullback
could see Microsoft shares revisit lower support around $359. Investors may seek buying opportunities in this region near last week’s trough situated just above this month’s significant
swing low
.
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As of the date this article was written, the author does not own any of the above securities.
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