Sunday, April 24, 2016

MSFT Microsoft Weekly Chart Long-Term Sideways Symmetrical Triangle and Two-Leg Bull Flag Played Out

Mr Softy soiled the bed last week losing -7% after disappointing earnings. A long-term MIcrosoft chart shows two textbook chart patterns playing out before last week's debacle. The neon green sideways symmetrical triangle took about seven years to develop and the resolution was to the upside breaking out at 22. Note the fake-out break down from the triangle during the 2008-2009 financial crisis then the central banker easy money catapulted MSFT back inside the triangle and out the top side to new all-time highs.

The vertical side of the triangle is 25 to 32 handles, call it 30. So the breakout at 22 would target 52-54; bingo, it's there, actually a high near 57, satisfying the sideways triangle pattern in play for the last 20 years. Isn't that something? Remember chart patterns work the same in any time period whether it is on a minute, hourly, daily, weekly or monthly chart.

The neon blue shows a two-leg bull flag pattern playing out over 22 years. Mr Softy runs from 1.56 to 40.86 at the dot-com bubble, 39.30 points, then pop, the tech sector implodes. MSFT bumps along sideways with a slight downward bias for the next several years. This is textbook action for a bull flag. The center consolidation flag places a low at 12.50 and then price runs higher breaking out above the flag area so you know it has legs. Therefore, 12.50 + 39.30 = 51.80 as a price target; bingo, it's there satisfying the bull flag pattern.

MSFT was printing new highs last as the red lines show negative divergence in place and boom, price receives a spankdown as the neggie d dictates. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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