Microsoft (NYSE: NASDAQ:) traded higher on Friday, after hitting support near 212.00 on Thursday. Overall, the stock is trading above a short-term tentative upside support line drawn from the low of Sept. 18, and thus, we would consider the near-term outlook to be positive at the moment.
However, given that, tomorrow, the company announces its earnings results, we prefer to hold a cautious stance ahead of the release.
If the results come out better than expected, the stock may rise above the 217.00 barrier, a move that may be a trend-continuation signal. Investors may then decide to push the price towards the 222.00 level, or even the 225.00 barrier, marked by the peak of Oct. 13.
Another break, above 225.00, would confirm a forthcoming higher high and may carry larger bullish implications, perhaps paving the way towards the stock’s all-time high, at 232.86, hit on Sept. 2.
Looking at our short-term oscillators on the 4-hour chart, we see that the RSI has just poked its nose above the 50 level, while the MACD, although slightly below both its zero and trigger lines, shows signs of bottoming. Both indicators suggest that the stock may start gathering upside speed again soon, which corroborates the case for some further near-term advances.
Now, in case earnings surprise to the downside, the share price may slide below 212.00, thereby confirming a forthcoming lower low. It will also be below the aforementioned upside line, and thus, investors may allow declines towards the 205.00 zone, near the low of Oct. 6. If that zone is not able to halt the slide, the next support may be the psychological round figure of 200.00, which prevented the stock from falling lower on Sept. 23 and 24. In case that level is also broken, we may see the slide extending towards the low of Sept. 18, at around 196.00.