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Will the Xbox One X give Microsoft a boost?

With the Xbox One X due for release, could this be a good time to buy Microsoft shares?

Microsoft logo
Source: Bloomberg

Microsoft have unveiled their most powerful console to date with the Xbox One X which provides hardened followers with the opportunity to really take advantage of recent ‘4k’ technology. With this in mind, investors will wonder whether the release of this console will provide a boost to Microsoft shares.

Nintendo was the last firm to release a console, with the Switch providing shares with a boost upon its release. However, the best example to follow here is the release of the PS4 Pro. Like the Xbox One X, the PS4 Pro is an update to the previous console rather than a whole new entity. It is more about providing greater processing power, greater graphics, and the ability to maximize the latest 4k technology.

The PS4 Pro was released in November 2016, following the incredible success of the PS4 unit. However, while the PS4 continued to sell well, the new Pro console was somewhat underwhelming in its take up. This will certainly be partly attributed to the fact that 4k TVs are not necessarily the norm yet and the need to have an expensive TV before you even buy the PS4 is a barrier for many gamers. There was also a push in users buying the original console owing to the price drop that typically comes when a successor is released. Keeping this in mind, it is worth tempering expectations of a bonanza launch. Watch out for the sales numbers for the new console, but much like Sony, it could be the old console which will benefit from sales.

Looking at the Microsoft chart, we have seen a nice pullback over the past fortnight, with the price falling into the 50-day simple moving average (SMA). This indicator has provided strong support on a number of occasions over the past year and thus it comes as no surprise that we saw the same thing happen last week.

Microsoft daily chart

On the four-hour chart, we can see the potential for a bullish double bottom formation, which would come in the event of a break through 7108. Given the wider context, a break through 7108 is more expected than a bearish move back below 6880. As long as the price remains above that level, further upside seems the likeliest event. At which point, new all-time highs seem highly likely.

Microsoft four-hour chart

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