Microsoft's Stock Hangs Out Near All-Time Highs As Earnings Await

Microsoft CorpMSFT 0.15%made a new all-time high on Monday in anticipation of an earnings beat.

Wall Street analysts see Microsoftreporting earningsof $1.78 per share, up from $1.40 in the first quarter of 2020. The Street estimates Microsoft will report revenue of $41.03 billion versus $35.02 billion in sales reported for the same period last year.

Although a stock’s reaction to earnings can be unpredictable, technical traders can look to the chart for information on the stock’s possible path.

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The Microsoft Chart:Microsoft’s stock hit $262.44 on Monday but didn’t get immediate follow-through and began to consolidate. Over the past 10 trading days, Microsoft’s stock has created a new support level at $256.78 and has traded in a sideways pattern while waiting for the eight-day exponential moving average (EMA) to catch up.

Microsoft’s stock is trading above both the eight-day and 21-day EMAs, with the eight-day EMA trending above the 21-day EMA which is bullish.The stock is a little extended from the 21-day EMA, however, and is currently trading 3% above it.

On April 8, when Microsoft’s stock continued its bullish break from abull flag pattern, it left a gap below at the $251 level.With gaps on stocks filling 90% of the time, traders can expect Microsoft’s stock to revisit this area in the future.

Bulls want to see a bullish reaction to Microsoft’s earnings for momentum to push the stock to another new all-time high.If the stock can make a new all-time high on volume, and gain momentum, it will trade in blue skies with little resistance.

Bears want to see a bearish reaction to earnings to push the stock down under the $256 level.If Microsoft’s stock loses that level of support, it will likely fill the gap below and could retreat to $246.13 before finding additional support.