Microsoft drops on earnings. Bounce higher at key support?

By Admiral Markets

Microsoft shares dropped 3% lower after the market closed yesterday on the back of the company’s third-quarter earnings report. The company actually posted stronger figures than analysts were expecting.

• Earnings came in at $1.95 per share against an expected $1.78 per share.
• Revenue came in at $41.71 billion against an expected $41.03 billion.
• Annualised revenue growth for the quarter was up 19%
• Azure public cloud grew 50% against an expected 46% growth

While the results even surprised Microsoft in its earnings call, the share price dropped. This is most likely due to profit-taking but does now present some interesting technical analysis levels for traders.

Source: Admirals MetaTrader 5, MSFT, Weekly – Data range: from Feb 23, 2014, to Apr 27, 2021, performed on Apr 27, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

The long-term, weekly price chart of Microsoft’s shows a clear uptrend that many investors will not want to fight.

Source: Admirals MetaTrader 5, MSFT, Daily – Data range: from Jul 30, 2020, to Apr 27, 2021, performed on Apr 27, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

The daily chart above shows some interesting technical analysis levels highlighted in black. The combination of the ascending trend line support and horizontal price level from the high of February all converge around the 50-period (red) exponential moving average.

If early investors do decide to profit take sending the share price lower, then these areas of support may be levels some traders may start looking for a turning point. Identifying the right price action trading patterns will be key in this area.

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By Admiral Markets