Strategy’s stock (MSTR) could be headed for a significant price correction followed by a strong recovery, according to prominent market analyst Sir Chartist. The technical analysis suggests a potential drop to $350 before staging a powerful comeback that could push prices back to $700 levels.
Technical Indicators Signal Short-Term Weakness
The analysis reveals several bearish technical formations that could trigger a sharp decline in MSTR’s price:
- Price has broken below both the 9-day EMA and 20-day SMA
- Moving average convergence showing bearish pattern formation
- Declining momentum from April’s uptrend
- Increased selling volume on red candles
Bitcoin Connection and Strategic Moves
Strategy’s recent announcement of a $2.1 billion stock offering to purchase more Bitcoin adds another layer to this technical setup. This move follows their growing trend of corporate Bitcoin accumulation, which has seen the company already acquire 7,390 BTC ($765 million) in their latest purchase.
SPONSORED
Trade Bitcoin with up to 100x leverage and maximize your profit potential
Volume Analysis and Price Targets
Key volume indicators suggest the following scenario:
- Initial panic selling could drive prices to $350 support
- Decreasing sell volume would signal selling exhaustion
- Recovery phase could begin once buying volume surpasses selling
- Previous pattern suggests potential for 100% upside from bottom
Expert Perspectives and Additional Signals
Supporting this analysis, crypto analyst Ali Martinez identified a TD Sequential sell signal on MSTR’s weekly chart. This technical indicator has historically preceded significant price corrections.
FAQ Section
What could trigger the predicted price drop?
The combination of technical indicators, increased selling pressure, and potential dilution from the new stock offering could catalyze the downward movement.
How long might the correction last?
Based on historical patterns and volume analysis, the correction phase could last until selling volume significantly decreases and buying pressure returns.
What are the key support levels to watch?
The primary support level is at $350, with secondary support around the previous consolidation area.
Conclusion and Action Points
While the short-term outlook suggests caution, the longer-term perspective remains constructive for MSTR, particularly given their aggressive Bitcoin acquisition strategy. Traders should watch for:
- Volume patterns at the $350 support level
- Buying pressure emergence after selling exhaustion
- Bitcoin price correlation effects
- Moving average convergence signals
