MSTR Stock Could Surge 55% After Bullish Chart Pattern Signals Recovery

TLDR

• MSTR stock shows a bullish reversal with the rare “Abandoned Baby” pattern.
• Analysts predict MSTR could surge to $280, marking a 50% gain.
• Bitcoin price recovery fuels optimism for MSTR’s technical rebound.
• Key support levels for MSTR are at $155, with potential upside to $200.

MicroStrategy’s (MSTR) stock has been signaling a potential 55% gain following the formation of a rare and highly reliable bullish pattern. After a steep decline of approximately 66% from its peak earlier this year, the stock has shown signs of recovery. The key driver behind this shift is the appearance of the “Abandoned Baby” pattern on its daily chart, which is typically considered a strong reversal signal in technical analysis.

The pattern formed after the stock fell to a low of $155.61, suggesting the end of a long downtrend. Traders are now expecting a potential rally, as the technical indicators point toward a more favorable risk-to-reward ratio. This shift in sentiment is further supported by a rebound in Bitcoin prices and the growing likelihood of a Federal Reserve rate cut in December.

The Abandoned Baby Pattern Signals a Bullish Turn

The Abandoned Baby pattern consists of three candles: a large bearish candle, a small indecision candle that gaps lower, and a bullish candle that gaps higher, leaving the middle candle “abandoned.” This pattern has been described as rare and highly reliable, with some analysts even referring to it as the “market’s version of a unicorn.”

According to The Bitcoin Therapist, the Abandoned Baby pattern is considered one of the most dependable bullish reversal signals in technical analysis. The recent formation of this pattern on the MSTR chart suggests that the stock may be primed for a sharp rebound. This technical development, combined with a broader positive macro outlook, has led analysts to predict significant upside for MSTR.

Bitcoin’s Role in the MSTR Recovery

The rebound in Bitcoin’s price has played a crucial role in boosting investor sentiment toward MSTR. MicroStrategy, which holds a large amount of Bitcoin on its balance sheet, is highly correlated with the cryptocurrency’s price movements. As Bitcoin stabilizes above $90,000, the outlook for MSTR has improved significantly. Analysts believe that if Bitcoin continues to strengthen, MSTR’s stock could follow suit and move toward the $200 mark or even higher.

MSTR’s recent price action suggests that the stock has found solid support in the $150–160 range. This level has been a key demand zone throughout 2024, and the stock has shown resilience in holding above it. If the stock can break through the critical $185–186 resistance level, analysts predict an aggressive move higher, potentially targeting $200 and even $280.

Risks and Downside Considerations

Despite the positive technical indicators, some risks could limit MSTR’s upside. The primary downside risk is Bitcoin’s volatility, which remains a significant factor for MSTR’s stock price. Any sudden downturn in Bitcoin’s price could adversely affect MSTR’s stock, particularly if the market experiences increased volatility or if Bitcoin fails to maintain its recent strength.

Additionally, any shifts in market expectations regarding the Federal Reserve’s monetary policy could influence MSTR’s stock price. If the anticipated rate cut in December does not materialize, or if investor sentiment turns bearish again, MSTR’s recovery could be derailed.