Start this trading week off with a bird’s eye view of long-term setups on Microsoft (MSFT), AUD/JPY and GBP/CHF!
I’ve got potential reversal plays and a consolidation breakout pattern lined up:
Microsoft Corp. (MSFT)
Are we about to see a huge reversal on Microsoft’s rally?
I’m looking at a huge head and shoulders pattern on its daily time frame, and it looks like the stock price is gearing up for a break below the neckline around $280. If that happens, MSFT could tumble by the same height as the chart formation.
Stochastic is still on the move down to show that bearish pressure is in play, but the oscillator is approaching the oversold region to suggest that buyers might take over soon.
The 100 SMA is above the 200 SMA for now, suggesting that there’s a chance the uptrend could carry on. Then again, MSFT is breaking below the 200 SMA dynamic support to indicate that sellers are just getting started.
GBP/CHF: Daily
Here’s another long-term reversal setup that’s just about to play out!
GBP/CHF is forming an inverted head and shoulders on its daily time frame, suggesting that the pair is done with its slide. Price has yet to break above the neckline around the 1.2600 handle to confirm that a rally is in the works.
Technical indicators are painting a different picture, though. For one, the 100 SMA is below the 200 SMA to hint that resistance is more likely to hold than to break. The 200 SMA dynamic resistance also seems to be keeping gains in check, too!
To top it off, Stochastic is heading down from the overbought zone, which means that sellers are taking over while buyers take a break. In that case, GBP/CHF might still retreat to nearby support levels or resume its selloff.
AUD/JPY: Daily
AUD/JPY is still stuck inside that triangle pattern we were watching last week, but it looks like a big move is in the works.
The pair is hanging out at the top of the formation, still deciding whether to make a bounce or a break. So which way will it go?
If resistance holds, price could slide back to the triangle bottom near the 81.00 major psychological mark. Stochastic seems to be favoring this move, as the indicator is heading south from the overbought zone.
On the other hand, a bullish breakout could take AUD/JPY up by the same height as the triangle pattern, which is roughly 700 pips tall. I’m seeing a fresh moving average crossover that suggests Aussie bulls might charge soon!
