As the chart shows, Microsoft (MSFT) shares surged sharply, forming a large bullish gap: while trading closed around $391 on 30 April, yesterday’s candlestick closed just below the $425 mark.

What Drove the Rally in Microsoft Shares?

Microsoft released its financial results for the first quarter of 2025, exceeding Wall Street expectations on both revenue (actual = $70.1 billion, 2.4% above forecasts) and earnings per share (actual = $3.46, 7.4% above forecasts).

Particular attention was drawn to the strong performance of Azure – revenue from Azure and other cloud services soared by 33% year-on-year. A significant part of this growth was fuelled by robust demand for artificial intelligence services, which helps ease concerns about the return on large-scale infrastructure investments related to AI.

In addition, Microsoft issued an upbeat outlook for the next quarter, which ultimately triggered the sharp rise in its share price.

Technical Analysis of MSFT Chart

Yesterday’s candlestick closed near its low (highlighted by the arrow), indicating that bears were active during the trading session. From a technical analysis perspective, this can be explained by the proximity of the price to two key resistance lines:

1 → The upper boundary of a descending channel drawn from significant price action patterns (marked in red). The relevance of this channel is confirmed by the price’s behaviour near its median line (dashed).

2 → A former trendline that served as support throughout 2024.

Therefore, a short-term correction cannot be ruled out following the sharp rally in MSFT shares, potentially tempering some of the enthusiasm generated by Microsoft’s strong quarterly report.

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