Good Morning, Mptraders! Tuesday, January 24, 2023-- Pre-Market Update: Earnings from tech giant MSFT after today's close (among other notable names shown below on the attached Daily Earnings Calendar). What does the MSFT setup look like ahead of this evening's Q4 report?
My attached 4-Hour Chart (see below Calendar) shows that MSFT has been in a messy sideways period and pattern since last October roughly between 215/220 on the low side and 252/255 on the high side.
The fact that the three-month sideways pattern is dwarfed by a dominant powerful 14-month downtrend (Bear Phase) that cuts across the price axis in the vicinity of 259.00, shown on both my 4-Hour and Daily Charts (below) and is accompanied by a sharply down-sloping 200 DMA, now just crossing beneath 256, IS a MAJOR IMPEDIMENT to a potentially positive reaction to earnings, and as such, should be the lid on any significant (+5% to +7%) upmove after the news.
That said, a positive reaction to MSFT earnings that propels the stock above 255-259 on a sustained (closing) basis will morph the entire Oct-Jan sideways pattern into a bottom.
What if MSFT earnings are a disappointment or otherwise elicit a negative (algo) reaction? Should MSFT head due "South" after earnings, a break of initial support at the prior minor pivot low at 230.68 (see attached charts) will trigger lower projections that should test very consequential support lodged from 221.50 down to the Oct-Nov low-zone at 219 to 212.25.
What is my technical bias reading into tonight's earnings report? To the upside for an ultimately FAILED attempt to challenge powerful resistance from 255 to 259 that resolves in another traverse from the upper to the lower boundary zone of the Oct-Jan. range... Last in pre-market is 242.29/59