MSFT breaks below Tuesday's low
Microsoft Corporation (MSFT) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
MSFT ended Wednesday at 205.05 losing $3.73 (-1.79%), slightly underperforming the Nasdaq 100 (-1.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 206.93, the market confirmed its breakout through the prior session low after trading up to $2.27 below it intraday.
Daily Candlestick Chart (MSFT as at Sep 16, 2020):
Wednesday's trading range has been $5.96 (2.83%), that's slightly below the last trading month's daily average range of $6.39. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MSFT.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on September 10th, MSFT lost -0.65% on the following trading day.
Prices are trading close to the key technical support level at 203.14 (S1). Prices are trading close to the key technical resistance level at 210.31 (R1). After having been unable to move above 209.78 in the previous session, the stock ran into sellers again around the same price level today, failing to move higher than 210.62.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Selling might accelerate should prices move below the close-by swing low at 201.24 where further sell stops could get activated. Trading close to July's low at 197.51 we might see further downside momentum if potential sell stops at the level get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Microsoft. Out of 262 times, MSFT closed higher 62.21% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 68.70% with an average market move of 1.52%.