A lesson in FOMO: MicroStrategy stock price continues to soar
MicroStrategy shares have skyrocketed recently. Here's what's driving the rally and why investors need to be cautious after recent gains.
Why is MicroStrategy's share price surging?
MicroStrategy's stock surged 15% on Wednesday to $495.98, continuing its meteoric rise as the company capitalises on its strategic investments and market positioning. The company has seen its shares skyrocket nearly 700% this year, significantly outperforming its peers and broader market indices.
This rally follows a series of high-profile moves to enhance its financial standing and expand its asset base, boosting its market capitalisation to $109.3 billion and securing its place as the 88th largest US public company.
Executive Chairman Michael Saylor credits the company’s bold strategies and innovative focus for revitalising its operations, transforming it into a market leader with substantial growth momentum.
Understanding the risks of parabolic price moves
The recent parabolic move in MicroStrategy's stock price presents both opportunities and significant risks for traders and investors. Historical data suggests that such rapid price increases often lead to increased volatility, as evidenced by the Average True Range indicator jumping from 1500 to 3500.
Investors considering opening an online trading account should carefully evaluate their risk tolerance, given the stock's current momentum.
A potential pullback to the November 13 high would represent a 26% decline from current levels, highlighting the importance of proper position sizing.
Technical analysis of MicroStrategy's share price
The stock's technical indicators show extremely overbought conditions, though momentum remains strongly bullish. Trading volumes have surged alongside the price increase, suggesting strong institutional participation in the rally. Resistance levels have been consistently broken to the upside, with previous resistance points becoming new support areas. However, the distance from major moving averages suggests the potential for mean reversion in the medium term.
MSTR daily chart
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