Daily Market Analysis By FXOpen

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Learning Key Signals of Reversal Candlestick Patterns

Candlestick charts are frequently used in technical analysis to provide traders with a visual representation of price movements and help them identify future price directions. Reversal candlestick patterns are a common tool traders look for to empower their trading strategies.

In this FXOpen article, we explain how to spot reversal candlesticks on a price chart, understand their signals, and use them to create a solid trading approach.

What Are Reversal Candlestick Patterns?

Reversal candlesticks are key formations in technical analysis that signal a potential shift in the direction of an asset’s price. These patterns are observed within candlestick charts, where each "candle" reflects the opening, closing, high, and low prices for a specific period. Reversal patterns suggest that the current trend, whether upward or downward, may be losing momentum, providing an opportunity for traders to enter or exit the market before the trend reverses.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.

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Microsoft (MSFT) Shares Decline Despite Strong Earnings Report

On 9 October, our analysis of Microsoft (MSFT) suggested that the stock price:

→ Was forming an ascending channel (shown in blue on the chart);
→ Could see a rebound from its lower boundary (indicated by an arrow).

Since then, the price indeed moved upward from this support around the $411 level, even surpassing $437. However, following Microsoft’s Q3 earnings report released post-market yesterday, the share price faced heightened volatility.

In the Q3 report:

→ Earnings per share (EPS) came in at $3.30, exceeding the expected $3.10;
→ Gross revenue was $65.58 billion, also above the forecasted $64.57 billion.

Despite these positive figures, MSFT shares saw a decline due to high volatility during after-hours trading, reaching $444 at one point and then falling to around $410. This drop may be due to Microsoft’s rising expenses. As reported by The Wall Street Journal, Microsoft’s capital expenditures in 2024 have hit $53 billion (about 28% of revenue), a substantial increase from the 12% average of revenue allocated to capital costs between 2014 and 2023.

As of pre-market trading today, MSFT is trading around $417 (approximately -4% from yesterday’s close), likely setting the opening level for today’s main session.

TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG

Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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How AI is Becoming a Bearish Factor for the Nasdaq 100

In 2024, the Nasdaq 100 index (US Tech 100 mini on FXOpen) has risen by approximately 20%, with optimism around the integration of artificial intelligence (AI) acting as one of the bullish drivers.

However, yesterday's reports from Microsoft (MSFT) and Meta Platforms (META) indicated that AI, as a factor influencing stock prices, may be shifting from a bullish to a bearish driver. The issue lies in the rising expenses that these tech giants are incurring in the race for leadership in this area.

Earlier today, we noted that due to increasing expenditures, MSFT shares fell by roughly 4%, despite a strong earnings report.

A similar trend is seen in Meta Platforms' stock: actual earnings per share and gross revenue exceeded analysts’ expectations. However, due to high capital investments, META shares in pre-market trading today are around 3% lower than yesterday's opening.

TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG

Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.