Why MicroStrategy (MSTR) Is Setting Up For A Bullish Move

As I often tell my students, levels or support and resistances are made to be broken. Which may be the case for MicroStrategy (MSTR) as it approaches an upper channel resistance level on the daily timeframe. As you see by the channel I have drawn out on my ToS screen in the video below, MSTR has been chugging along higher in the midst of this channel after surging higher once it broke out of one channel.

Now, the stock finds itself in another channel with another opportunity to break out of it. While the trade may not be looking for a break of the upper bound of that channel, there is a trade around the whole psych number of 400. After the recent price action, a break and retest of 400 could be a good entry if we were to make a move toward the upper limit of the channel.

A breakout trade might have their eyes fixated on the upper channel resistance, but for us, we would want to get in the trade looking for that channel to attract prices. You can often look at levels as if they’re magnets. If prices get close enough to a level, look for the level to sort of pull the stock in closer and closer until a major reaction occurs.

For this setup, the same idea applies, but instead of hoping for a further breakout through that upper resistance, we want to join the move in getting there first. That way, we can use that upper level resistance as a place to trim our positions if we were to get there. The idea being we would lock some profit in before any pullback that could be caused by that level.

As of now, MSTR is looking strong in an otherwise sluggish market, so we will want to make sure we keep the trend our friend here. Keep this trade on your watchlist and see how it plays out and if you put this trade on, remember patience and risk management are key to the success of the trade.

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