Microsoft Recently Hit an All-Time High. Here's What Technical Analysis Says Might Happen Next

Well, readers can see in this chart prepared on March 14 that MSFT developed a nicely defined "cup-and-handle pattern" (the blue lines below) between mid-July into late November:

This potentially created a so-called "pivot point" at around $384 (denoted with a green arrow in the chart above).

Pivot points are areas on a chart where a breakout could occur or resistance might set in. They're spots where traders (or the automated investing algorithms that some institutional investors use) are likely to make trading decisions.

In a cup-and-handle pattern, the cup's right-side apex is the pivot. If there is no handle, the cup's left-side apex is the pivot.

In meeting resistance at its $384 pivot point, Microsoft formed a basing period of consolidation that lasted into January. It then entered a second basing period this February, denoted by the purple lines to the right of the chart above.

This indicated a new pivot point of about $420, which was the top of the purple lines (denoted by a blue arrow above).

On March 14, Microsoft broke through this pivot point even though that was a down day for the market as a whole. If Microsoft sustains at or above this $420 level, many technical analysts would consider that a positive.

Next let's look at a chart of Microsoft's daily Moving Average Convergence/Divergence (MACD) as of March 14:

The MACD appears in this chart to be finishing a crossover (denoted by a gray arrow) of the 26-day Exponential Moving Average (the blue line above) by the 12-day Exponential Moving Average (the orange line). That has historically been a bullish signal.

Meanwhile, a histogram of Microsoft's 9-day Exponential Moving Average (the red and green bars in the chart above) has just moved into positive territory, as denoted by the purple arrow above. That's also historically been a bullish signal.

The bottom line -- Microsofts charts were showing two historically bullish signals as of March 14, plus a potentially third bullish signal if the stock manages to sustain at or above $420.

Full disclosure: As of the time of this writing, I was long Microsoft stock.