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With an absolutely huge $5.4 billion purchase of $BTC announced on Monday, MicroStrategy stock would perhaps be expected to rise. However, $MSTR is down 25% from its $540 high, and as per pre-trading, a further fall to $376 could take place.
There can be no doubting the genius behind Michael Saylor’s consistent debt raises that are used to buy $BTC. Since the beginning of 2023, $MSTR is up 2,660%. That said, the most recent massive purchase of 55,500 $BTC has not moved the dial to the upside, neither for $MSTR, nor for $BTC.
$MSTR falls through trendline
Source: TradingView
Looking at the short-term chart for $MSTR, it can be seen that the price has fallen through the ascending trendline. It is being held by the 0.618 Fibonacci, but with the pre-trading price still falling, it may be the 0.786 Fibonacci that ends up stemming this current drop.
Current reversal could still be bullish for $MSTR
Source: TradingView
Looking at $MSTR on the weekly time frame it can be seen just how strongly the price surged from the bottom of the bull flag in early August. Taking a Fibonacci extension from here up to the top, it can be noted that the price still hasn’t even gone down to the 0.382 Fibonacci yet, so if it reaches this level and bounces, it is actually a very bullish reversal.
A concern is at the bottom of the chart, in the Stochastic RSI. Here it can be observed that the indicator lines have just started to cross back down. It may be that the lines stay at the top for a while longer, as was the case back in mid November last year, through to early January. That said, they will have to come down at some point, bringing price momentum down with them.
$MSTR price rejects at 10-year ascending trendline
Source: TradingView
Zooming out further on the weekly time frame, it can be noted that an ascending trendline bisects the tops of price action in 2014 and into 2015, in February 2021, and just recently the price has been rejected from this same trendline.
Does all this mean that a top has been reached? Maybe. That said, the trendline is very steep, and therefore the price could continue to go up beneath it. The main sign of a top however would be if Bitcoin showed that it had reached a climax. The price is on the way down for $BTC, but the indications are that a bull market top has not been made yet. Therefore $MSTR should still have some upside runway.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
