Microsoft Corporation (NASDAQ: MSFT)

Microsoft Corporation develops, licenses, and supports software products, services, and devices worldwide. The company markets and distributes its products through original equipment manufacturers, distributors, and resellers, as well as through online and Microsoft retail stores.

Take a look at the 1-year chart of Microsoft (NASDAQ: MSFT) below with my added notations:

1-year chart of Microsoft (NASDAQ: MSFT)

Over the past couple of months, MSFT has hit the $74 resistance (red) on several occasions. In addition, the stock was climbing a potential trend line of support (green). Together, these two lines formed an ascending triangle on MSFT. Eventually the stock would either have to break the $74 resistance or the trendline, and yesterday MSFT broke slightly above resistance.

The Tale of the Tape: MSFT broke its triangle resistance. A long trade could be made on a pullback to the $74. A break back below that mark could be an opportunity to get short instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT