Cisco Systems (CSCO) - Get Report hit a two-month high on Tuesday before slipping lower into the close. On Wednesday, shares were slightly higher as investors geared up for the company’s quarterly earnings report after the close of trading.
With so many other large-cap tech stocks doing so well - like Apple (AAPL) - Get Report and Microsoft (MSFT) - Get Report - investors are hopeful that Cisco will turn in a quarterly result that exceeds expectations.
If it can, shares may resume the move higher, adding to the stock’s 34.5% rally from the lows. If not, we’ll have to see where support comes into play on the dip.
Let’s look at the charts ahead of the print.
For now, Cisco stock is holding the 61.8% retracement for the 2020 range as support. That’s a good sign as this level was acting as resistance throughout April.
However, what bulls really want to see is a move up through $45. If shares can close above this mark, it puts Cisco stock back above several key levels. Specifically, it puts the stock back over the 200-day moving average, as well as notable support throughout 2019.
If Cisco can clear $45, it puts a gap-fill from February back in play near $46. But that’s where the fun starts. Above that puts $49 to $50 back in play, an area that was resistance from September through February, before shares began to tumble lower.
But let’s not get bogged down by all of the levels. This all starts with a close over $45. Above that and bulls notch a bit more momentum and unlock further upside potential.
Should shares pull back instead though, bears will gain the momentum.
Specifically, let’s keep an eye on the $41 level on the downside. That’s where the 50% retracement comes into play, along with uptrend support (blue line). Below that and the 50-day moving average at $40 is possible.