MicroStrategy Stock Falls After Bitcoin Purchase: A Technical Analysis

MicroStrategy Inc. MSTR shares fell Monday after the company announced it made a Bitcoin BTC/USD purchase. The company purchased 13,005 BTC priced at $37,617 each for a total of around $489 million. This brings the total company stake to 105,000 BTC.

MicroStrategy was down 9.2% at $587 at last check.

MicroStrategy Daily Chart Analysis

• Shares were falling in the last few months, but now look to have broken out into what technical traders call a falling wedge pattern.
• The stock is trading above both the 50-day moving average (green), and the 200-day moving average (blue), indicating sentiment in the stock has been bullish.
• Each of these moving averages may hold as an area of support.

Key MicroStrategy Levels To Watch

• The stock looks to have broken out of a falling wedge pattern and is now looking to test the old pattern resistance as support.
• This bullish reversal pattern occurs after the stock makes a large run up and starts pulling back. The slope of the line connecting the highs is much steeper than the line connecting the lows.
• As the stock looks to have broken out of resistance, it may now go on to test this same area as support. If the support can hold, the stock may be able to push higher.

What’s Next For MicroStrategy?

Bullish technical traders would like to see the stock retest the pattern resistance, but now as support. If this area is able to hold as support, the stock may see a further upward push.

Bearish technical traders would like to see the stock fall back to the area it was trading at in the wedge. Bears would like to see the pattern support fail to hold and for the stock to dip below the support level. This may bring about a stronger bearish move.