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Key Takeaways
- Microsoft shares fell nearly 3% in Tuesday’s extended trading session after the tech giant reported better-than-expected quarterly results but missed Wall Street’s revenue estimate for its cloud segment.
- The earnings-driven drop comes after Microsoft shares have fallen nearly 10% from their record close set on July 5 amid a broad sell-off in tech stocks.
- Shares had fallen below the 50-day MA leading into the company’s quarterly report, with volume increasing over the past week, indicating that investors have positioned for post-earnings volatility.
- Microsoft shares may encounter support at key chart levels including $410, $385, $367 and $340.
Microsoft (MSFT) shares tumbled nearly 3% in Tuesday’s extended trading session after the tech giant reported better-than-expected quarterly results but missed Wall Street’s revenue estimate for its cloud segment, a business that brings in around 44% of the company’s total sales.
The earnings-driven drop comes after Microsoft shares have fallen nearly 10% from their record close set on July 5, pressured by a broad sell-off in technology stocks and a global IT outage earlier this month caused by an erroneous software update by cybersecurity firm CrowdStrike (CRWD) that triggered widespread disruptions.
Below, we take a closer look at the technicals on Microsoft’s chart and identify key price levels to watch out for amid post-earnings volatility.
Volume Increases Leading into Earnings
Since bottoming out in November 2022, Microsoft shares have trended steadily higher, with momentum accelerating following the 50-day moving average (MA) crossing the 200-day MA in March last year to form a golden cross pattern.
However, more recently, the shares continue to retrace from their all-time high (ATH) set earlier this month and have fallen below the 50-day MA leading into the tech behemoth’s quarterly report. Importantly, volume has increased over the past week, indicating that investors have positioned for post-earnings volatility.
Monitor These Levels Amid Post-Earnings Fall
Amid earnings-related selling, market participants should monitor four key chart levels where Microsoft shares could encounter support.
Firstly, it’s worth watching if buyers can defend the $410 area, which currently sits near Wednesday’s expected opening price. Positioned less than 2% above the rising 200-day MA, this level could find support from a horizontal line linking a series of similar trading levels between late January and early June.
An inability to hold the above level could see the shares decline to $385, a location on the chart where they may attract buyers near the November 2023 swing high, which also aligns with the low of a minor pullback in January this year.
Ongoing selling may spark a fall to $367, where the price could encounter support from a trendline connecting the July 2023 swing high and a narrow trading range between December and January that formed as part of the stock’s longer-term uptrend.
Finally, a more bearish move could see the shares test lower support around $340, a location on the chart likely to garner significant buying interest near multiple price peaks between November 2021 and September last year.
Microsoft shares fell 2.7% to $411.40 in after-hours trading Tuesday.
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