Key Takeaways
- Microsoft shares rose for the the seventh consecutive session on Tuesday, with the latest gains coming after the tech giant hiked its quarterly dividend by 10% and approved a $60 billion stock buyback.
- Bullish sentiment may carry into Wednesday after the tech giant and the world’s largest asset manager, Blackrock, jointly announced plans late Tuesday to launch a $30 billion AI infrastructure fund.
- The stock may potentially be carving out a head and shoulders top, a chart formation that predicts a bullish-to-bearish trend reversal.
- Investors should monitor important resistance levels on Microsoft’s chart at $448 and $468, while eyeing key support areas at $410 and $385.
Microsoft (MSFT) shares logged their seventh consecutive higher close on Tuesday, with the latest gains coming after the company hiked its quarterly dividend by 10% and approved a $60 billion stock buyback.
Bullish sentiment may carry into Wednesday after the tech giant and the world’s largest asset manager, Blackrock, announced plans late Tuesday to launch a $30 billion artificial intelligence (AI) infrastructure fund to build data centers and energy projects aimed at meeting the growing demands for the technology’s computing power.
The fund, which will mobilize up to $100 billion in total investment potential when including debt financing, includes Abu Dhabi-backed investment company MGX as a partner, while AI heavyweight Nvidia (NVDA) plans to contribute expertise.
Below, we’ll take a closer look at Microsoft’s chart and turn to technical analysis to identify important price levels to watch out for.
Potential Head and Shoulders Pattern
Since bottoming just below the closely watched 200-day moving average (MA) in early August, Microsoft shares traded mostly sideways before resuming another move higher earlier this month.
However, it’s worth noting the stock’s recent advance has occurred on declining trading volume, indicating a lack of participation from larger market participants.
Moreover, the price may potentially be carving out a head and shoulders top, a chart formation that predicts a bullish-to-bearish trend reversal.
Microsoft shares gained 0.9% on Tuesday to close at $435.15.
Looking ahead, it’s worth keeping an eye on four key price levels that investors will likely be watching.
Resistance Levels to Watch
If the shares continue rising, they could initially meet overhead resistance around $448, where traders who bought earlier this month may look for exit points near a trendline that connects a period of narrow consolidation in June with a minor countertrend peak in July.
A move above this level could see the shares retest the $468 area, where they would likely encounter selling pressure around their all-time high (ATH) set in early July. A breakout though this area would invalidate a head and shoulders formation.
Support Levels in Play
Amid share price weakness, investors should keep a close eye on the $410 area, a location on the chart just below the rising 200-day MA where the price finds support from a horizontal line linking a series of comparable trading levels from late January through to this month.
Ongoing selling could trigger a decline to around $385, a region where bulls may look for buying opportunities near the November swing high and August swing low. A breakdown below this levels would confirm a head and shoulders formation on Microsoft’s chart.
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