Watch These MicroStrategy Levels As Stock Rises To All-Time High After Bitcoin Buy

MicroStrategy (MSTR) shares could remain in focus on Tuesday after surging to a new record high following news that the software analytics firm had purchased an additional $4.6 billion in Bitcoin (BTC).

The company bought 51,780 bitcoins for approximately $4.6 billion in cash at an average price of approximately $88,627 per bitcoin. bitcoin, bringing its total holdings in the pioneering cryptocurrency to 331,200 BTC, according to a filing with the US Securities and Exchange Commission (SEC).

MicroStrategy, whose BTC holdings are equivalent to about $30 billion at current prices, began acquiring Bitcoin in August 2020 to hedge against inflation and diversify the company’s treasury. MicroStrategy shares are up nearly sixfold since the start of the year through Monday’s close, significantly outpacing Bitcoin’s year-to-date (YTD) return of around 115%.

The company’s stock rose 13% Monday to close at $384.79.

Below, we break down the technicals on MicroStrategy’s weekly chart and point out key price levels to watch out for.

Volume strongly supports price momentum

MicroStrategy shares have remained in a steady uptrend since the 50-week moving average (MA) crossed above the 200-week MA in late January to form a bullish golden cross signal.

Recently, gains have accelerated after the stock broke out of a rectangle formation last month. Importantly, robust trading volumes have underpinned the rally, with shares last week registering their highest turnover since MicroStrategy went public in 1998.

The Relative Strength Index (RSI) confirms bullish price momentum with a reading above the 80 threshold, but also marks overbought conditions that could trigger short-term retracements.

Let’s apply technical analysis to MicroStrategy’s chart to project an upside price target and identify key support levels.

Bars Pattern Price Target

Investors can project an upside price target using a bar pattern, a charting technique that analyzes past trends to predict potential future movements.

When we apply this tool to MicroStrategy’s chart, we take the stock’s trend higher from October 2023 to March of this year and move it off the lower trend line of the rectangle formation. This predicts a price target near $525, about 36% above Monday’s close.

We chose this prior trend as it captures the broad move higher that preceded the rectangle formation and assumes a continuation of the stock’s longer-term uptrend.

Important support levels to watch

If profits emerge, shares may initially revisit the $180 level, an area on the chart where investors can look for buying opportunities near the upper trendline of the rectangle formation.

Selling below this key level could act as a catalyst for a steeper selloff to around $115. This region of the chart is likely to encounter support near the prominent February 2021 top and the lower trendline of the rectangle pattern.

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As of the date this article was written, the author does not own any of the above securities.