Bearish breakdown for MSFT on the Fibonacci Bollinger Band

The monthly chart for Microsoft (MSFT) shows a breakdown below the upper band (red line) of the Fibonacci Bollinger Bands (FBB) indicator. While it is likely that MSFT will bounce for the time being, as inflation worries cool and tech stocks attempt a rally, the upper band will likely act as resistance. If the price rebounds it might be hard to sustain a breakout above $300. While I like MSFT as much as anyone else, the charts do not lie. The chart is showing that there is a long-term mean reversion occurring in the price of MSFT. The white line is the standard deviation basis for the monthly chart which reflects the downside potential. It's quite steep and the yearly oscillators are saying MSFT is primed to correct down to this level. All of this will unfold slowly (months to years) and fakeouts might trap some bulls. Is your MSFT position prepared for a worst-case scenario reversion to the mean? Trade wisely.



Not financial advice.

Comment:

Just to be clear, I'm not saying to go out and sell or short MSFT. I'm just saying to have your stop losses in place and be wary of the breakouts... might it be a fakeout? Do you really want to be buying MSFT calls that expire in two years on leverage with this chart?