Microsoft Corp (MSFT) shares rallied 1.03% to $52.12 following the announcement the company will abandon the smartphone business. The tech giant plans to streamline the company’s smartphone hardware business, which will impact up to 1,850 jobs. The company's reduction of 1.6% of their workforce will cost them between $950 million in restructuring and impairment charges. The actions associated with today’s announcement are expected to be substantially complete by the end of the calendar year and fully completed by July 2017, the end of the company’s next fiscal year.
Price action on the MSFT daily chart shows today’s rally tentativey found resistance from the 100-day SMA which currently trades around the $52.46 level. If we continue to see prices rise, further resistance may come from the $53.00 region. It is around that area that price could form a bearish Gartley pattern. Point D is targeted with the both the 50.0% Fibonacci retracement of the X to A leg and the 161.8% Fibonacci expansion level of the B to C leg. If valid, the reversal pattern could help price reverse back towards the $50.00 level.
If the bearish reversal pattern is invalidated, major resistance will come from the $55.50 to $57.00 zone.
The Trade: Sell MSFT at $53.00, with a stop loss at $53.50 and a take profit at $51.50. The Risk/Reward Ratio is 1:3