Bulls taking Control - Microsoft?

Published on Tuesday, 31 January 2012 04:06 Written by Danny Miller

New York, January 31st (TradersHuddle.com) - Shares of Microsoft Corporation (NASDAQ:MSFT) ended the trading session higher by $0.31 or 1.04% from its previous close. Microsoft's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Microsoft Corporation (NASDAQ:MSFT) develops, manufactures, licenses, and sells software products. The Company offers operating system software, server application software, business and consumer applications software, and Internet and intranet software. Microsoft, with its Windows franchise, has the dominating operating software in the PC market, which allows the company to sell other software solutions. The software giant has made inroads on mobile devices and internet based applications, and develops video game consoles and digital music entertainment devices. Microsoft was founded by Bill Gates in 1975 and is headquartered in Redmond, Washington.

Microsoft's recent stock range has been formed by a trough where calculated support was defined at $24.30 and by a peak that established the resistance level at $29.95, which could be used by traders planning their trades.

Traders wanting to establish a position in Microsoft or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: