Microsoft (MSFT) – Get a free report has been in the news quite a bit, and shares of the software stalwart continue their volatile price action.
More recently, Microsoft shares were in the spotlight due to reports of a possible investment in OpenAI, the parent of ChatGPT.
The new artificial intelligence program has swept the internet, attracting everything from casual interest from unique users to seemingly multi-billion dollar deals from megacap tech.
The reported deal would value OpenAI at $29 billion and would ultimately lead to a 49% stake for Microsoft.
Although Microsoft would use the agreement to help fuel growthothers speculate that it could also be in an effort to escalate his battle with Alphabet’s (Google) – Get a free report (GOOG) – Get a free report Google.
The news lined up with a multi-day burst in Microsoft shares, but it has barely returned to an uptrend. Let’s look at the graphs.
Microsoft Stock Trading
The chart above shows daily price action on the left and weekly price action on the right. In some ways, there are certainly some positives.
Perhaps most notably, Microsoft shares were placed in a higher low and found support at its 200-week moving average. It is also approaching the previous breakout level of $225.
On the downside, Microsoft shares remain in a downtrend and a descending channel, which is highlighted on the weekly chart.
If you zoom in on the daily chart, you’ll see that slippery three-day decline where Microsoft shares fell about 10% from the high to the low.
In recent sessions, the rally is sending shares to the 10-day moving average on the decline and the previous support zone near $234.
This is a key area.
If the trend remains strongly down, this area is likely to act as resistance, leaving the recent low vulnerable. If that level doesn’t hold, at $219.35, it opens the door to the 52-week low.
However, if Microsoft shares can go higher, it opens the door to the gap-filling level at $237.40, followed by a potential rally to the 50-day and 21-day moving averages.
Above that, the $245 to $247 zone is in play. That is recent resistance and the 61.8% retracement of the current range.
Simply put, keep an eye on the $233 to $234 zone.
It will either be resistance and keep the current downtrend intact, or it will break and allow Microsoft shares to potentially rise.
