Transcription
What's up, Traders? This is V Trades, and today I will be doing a technical analysis breakdown for MicroStrategy Incorporated, with the ticker symbol MSTR.
I will first be going over what I see in the daily chart and finish the video off with the weekly chart. This video is for entertainment purposes only; please trade at your own risk.
So, I'm back, guys, from my holiday in Las Vegas, Nevada. I enjoyed the time with my family, and I really did miss doing this for you guys. I have to cover what's going on for MicroStrategy today and hopefully the rest of the week.
Let's take a look at what's going on for MicroStrategy. You can see that it's clearly dropping because Wells Fargo Securities downgraded it from equal weight to underweight. You see the factor of the date right here on the right side. MicroStrategy stock experienced a decline of over 7% after Wells Fargo Securities downgraded it from equal weight to underweight, establishing a new price target of $30.
I mean, I don't know why they're saying $30, but you know, it's kind of funny that these guys have no idea why the price is dropping. I keep on saying that they write the news to fit the price action. They're not going to come over here and tell you that this was prior support that turned into resistance, and we have a trend line and all this stuff.
You know, they're going to come up with some nonsense saying, "Oh, the price dropped because one bank downgraded it." You know, who's really selling? Is anybody watching this channel really selling after hearing this news? So what makes you think other people are selling, right? It doesn't make any sense. Maybe some people are, but most people are not going to be selling just because of that. Maybe they're even more bullish; you know, who cares?
But again, that's why I only focus on the technicals. The only time to focus on the news or the fundamentals is as long as you know the price, as long as the company's not going bankrupt. And, you know, if there's an earnings report, that's something to keep an eye on as well because that can add a lot of volatility. So you want to watch the news maybe for volatility increases, but other than that, to have a good direction of price, you want to watch the technicals.
So let's go over the daily chart. What is the price doing? Well, obviously, it had a nice rally up from that 280 zone and into the 370s, almost the 380s. It looks like basically the 380s, 383, and now the price is selling off still lower. So why is that still going on?
Let's go over the chart. You can see that we have this downward trend line in play off the two swing highs right over here. We have a trend line off of the starting point and then this swing right here. So these are critical levels, and now we have a rejection right around that zone as well.
It looks like the trend line is still in play, which means, again, the line is just showing the bearish momentum. It's just that; it's not a magic line or anything. You don't even need the line there, but you can still see that we're making lower highs. So the line just helps you point it out easier.
You still see that the bearish momentum is still in play. The bears are maintaining this angle of descent down. Also, there was rejection from that 365 level, 366 level. This was prior resistance right over here. Price broke above it, support, support, support, broke below it, resistance, and now we're still below it, resistance.
We did see a break above it on Monday, but again, that was just a peak above it. You want to see a strong push above it and then hold it, and then a rally. Either that, or you see a strong push above it, and then bulls are too strong, bears are too weak to get back even to that level, and then we rally.
So either of those types of situations will be bullish: we break above, we hold it, or we break above and we don't look back. Something like that would be bullish. We didn't get any of that; we just saw a peekaboo above the level and then a failed break below.
And again, don't think of this line as a sharp point. Think of it as a box. So, you know, there's like right around here you could say is give or take a couple points of resistance and support. So think of it more as a box.
What I'm trying to say is that we hit two levels of resistance or areas where traders are going to be selling or taking profits because they look at the prior history, and it shows that it was resistance before. So there's a good chance they can act as resistance again.
In this case, it looks like price is dropping down lower. There is some minor support at the 316, 317 level. So you see that there is some support right over here and right over here. Then we did see a break below; now we're back above it.
So are we going to see some sort of higher low, something like that off the 320s, higher low, break the trend line, break above the 360s, and rally? Maybe. I mean, it's not out of the question, but again, when you're doing this, you can't just look at one thing.
"Oh my God, the EMA is pointing up; that means we should go higher." "Oh my God, the RSI is 10; we should go higher." You have to look at everything. Look at everything on the chart: the bullish side, the bearish side, the neutral side. Look at everything, and then you weigh it, and then you see which one is stronger.
Right now, you clearly see there's more bearish signs on the chart than bullish signs. This is where you can get in trouble if you're not rational and you have a certain bias. I mean, you're always going to have a certain bias in play, maybe even just a little bit, but your goal is to keep it as small as possible, right? Or you're going to make the wrong decisions.
In this case, it looks to me that the bears are still dominating in the short term, and the measurement target is still in play at the 240 level. The gap fill wasn't completely filled at the 275, so those are still two good targets for the bears to get to. Is it guaranteed? No, but it's still in play.
I think a lot of people were kind of bullish right after these two rallies right here, thinking we had bottomed. This is what happens when you don't look at the whole story. There was still clearly resistance on the chart, so until we saw a decisive break through it, it was still resistance.
So price is dropping down lower again. We could find some sort of support maybe at the 320 level and reverse higher, but again, that's going against the macro trend, right? It's kind of like you stepping in front of a train. Are you going to be able to stop the train? I mean, maybe, right? Maybe like a little bit, but most likely you're not.
So this is going to be probably broken through, and we're going to probably see lower prices, especially with Bitcoin. Bitcoin looks really weak right now; it looks like it's ready for another drop. It came back inside of this range; it's not looking that bullish right now.
Again, this can go all out the window if we can maybe see some sort of higher low, something like that, but it's not looking likely from what I see right now. But again, I'm always open to changing my mind. I'm always going based on the price. If it's bearish, I'm going to be bearish. If it's bullish, I'm going to be bullish.
So right now, it looks like price is setting up to drop down lower, maybe make a higher low for higher prices, but more than likely just continue trending down lower towards the 200s, 270, 275, and then 240. Maybe hopefully it reverses from there; you don't want to see it going too low.
So that's all I see on the daily chart for MicroStrategy. A good analogy for what happened was basically if you see in movies where sometimes, you know, there's a big giant monster, and then the people are running away from it and hiding. Then they realize, "Oh, the monster is gone," and they step out of the house and get squished.
So that's basically what happened right over here. You know, people were thinking we were bottoming, then we were going to rally higher, and then all of a sudden they got all excited, and boom, they got squished; they got trapped.
So it wasn't clear that price was ready to move up higher because there was still major resistance in the way. But again, overall, it still looks pretty bearish in the short term, expecting lower prices. Maybe we reverse at the 320; I'm not expecting it to, but it's always a possibility.
If we break that, I think we're going to probably see a retest at the 284, 275, and then 240. So that's all I see on the daily chart for MicroStrategy.
Now, let's take a look at the weekly chart. The weekly chart shows that price did pull back to the EMA, which is a good sign. We're still above it, which is a good sign as well. So overall, it looks to be still targeting the same price levels I discussed on the daily chart.
The weekly candle is looking bearish as well. You see that it's the tail bar; it's looking most likely it's going to close bearish for the week unless we see something crazy happen in the market.
Long term, we'll take a look at the log chart because the regular chart does not take into account the prior price action back here. It looks flat, but overall, let's take a look at the long-term chart since basically the uptrend started in December of 2022, January of 2023.
So let's go and clear the drawings. What do I see? Well, you can draw a channel off the swing lows. We have one, two, three touches, and we got two touches on the top. This is a very nice fitting channel, something like this.
But you see that price hit the top here but cannot work its way to the bottom over here. So that means the trend is stronger than previously. So maybe we are in a steeper uptrend channel. You can adjust the trend line something like this.
So maybe we are in a steeper uptrend, which also works pretty well and fits the chart really nicely. You can see that this side of the trend line is right around the 240 level. If we get down this week to the trend line, that's about, you know, the 200.
The longer it takes, the higher the target. So maybe if it takes a couple more weeks, maybe into the end of January, that would be about maybe 210, 215. But overall, we could see price reach this side of the channel, so maybe even the 179 because that was the prior breakout right over here.
I don't think so because the trend line can stop it, but it's not out of the question. So we could just be seeing a big complex pullback, find support, and then rally higher towards the $1,500 price target that I have.
So this is all one leg down, one leg up right here. This is the second leg up, and you can see that targeting right around the $1,557. So that is the target for MicroStrategy currently as of right now, and I'm expecting it to continue higher.
I don't think this is a dead-end company or a Ponzi scheme or a zombie company. I think they're doing very well because they own Bitcoin. Like I said before, if you don't have Bitcoin on your balance sheet, most likely you're going to be suffering in the future.
But, you know, MicroStrategy has the most on the balance sheet, so most likely it's going to do very well in the long term.
So that's all I have for MicroStrategy on the daily and weekly charts. Most likely, I'll give you guys an update tomorrow. This is V Rad, and thank you for your time.