Microsoft is falling today: what traders are watching

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Microsoft slides 10.52% today

Highlights

Microsoft exceeded Wall Street expectations in its fiscal second quarter, reporting revenue of $81.3 billion and adjusted EPS of $5.16.
Cloud revenue surpassed $50 billion, with 15 million Microsoft 365 Copilot seats and positive financial effects from OpenAI’s restructuring boosting growth.
MSFT trades sharply below key moving averages at $432.18, with overhead resistance at $464.19 and strong bearish momentum after a 10.52% drop.

Earnings and AI investments sustain optimism despite slow cloud growth

Microsoft reported its fiscal second quarter earnings, delivering revenue of $81.3 billion and adjusted earnings per share of $5.16, both exceeding Wall Street estimates. Cloud revenue rose above $50 billion, highlighting continued growth in the cloud segment despite a slowdown in the pace of expansion. The company also noted 15 million seats for its Microsoft 365 Copilot and positive financial implications from OpenAI’s restructuring. Record investments in artificial intelligence initiatives were emphasized as a driver of recent spending.

Anton Kharitonov, expert at Traders Union, notes Microsoft’s break far below its key moving averages and the ongoing strong sell signals from technical indicators. He points out that both the MACD and price action imply sellers remain firmly in control, with volatility amplifying downside risk. Kharitonov is skeptical about recent earnings momentum given the immediate market response. He underlines the threat of further weakness if support at $432.00 gives way and questions the sustainability of cloud segment growth. "In this setup, capital protection is paramount and I see little case for aggressive long exposure until clear bullish signals emerge," he states.

Viktoras Karapetjanc, expert at Traders Union, emphasizes Microsoft’s outstanding revenue and earnings outperformance, especially in the cloud and AI sectors. He views the ongoing AI investment and OpenAI developments as strong long-term growth drivers, even as price action lags in the short term. The analyst believes that volatility offers opportunities for accumulation, citing the bullish structure of Microsoft’s financials. "I remain confident that key support levels will underpin further growth as the company continues to lead in critical technology markets," Karapetjanc asserts.

Bearish reversal confirmed as momentum signals diverge following gap down

Momentum indicators show conflicting signals. The daily MACD signals a strong sell, while the D1 ADX at 19.65 is neutral, suggesting waning trend strength. Several oscillators including Stoch RSI and BBP signal recent overbought conditions, but daily RSI and CCI tilt positive, revealing divergence between momentum and exhaustion signals. Sellers dominate the intraday mood, with the stock gapping sharply down from $483.00 to open at $436.30, currently near today’s low in a highly volatile session after a 10.52% drop. The tone remains under pronounced pressure as intraday indicators and price action align with a strong bearish reversal, but conflicting oscillators call for caution.

Previously it was reported that Microsoft’s shares are trading above their short- and medium-term moving averages but remain below the longer-term 200-day average, signaling upward momentum with resistance near $485. Despite a moderate RSI and continued overbought readings from most oscillators, a negative MACD, limited bullish signals, and narrowing volatility bands suggest increased risk of a short-term decline or consolidation around key support and resistance levels.

Source of Data: MSFT Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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