MicroStrategy ( MSTR) , an enterprise business intelligence application software vendor led by Michael Saylor, has attracted a lot of attention because of its bitcoin purchases. The company was cut to an "underperform" fundamental rating by a sell-side firm Tuesday. Let's check the charts and indicators to see what they are saying.
In the daily bar chart of MSTR, below, we can see how the shares have tumbled from short of $900 in early November to around $150 in May, June and July. The slope of the 50-day moving average line has turned positive as MSTR rallied above the line this month. The slower-to-react 200-day line is bearish and intersects way up around $450.
The On-Balance-Volume (OBV) line was bearish until early May and then it soared sharply higher. I have no special knowledge of who was buying MSTR aggressively but it may well have been short-covering. The Moving Average Convergence Divergence (MACD) oscillator is now bullish. Monday's price action generated a short-term reversal pattern -- a close below the low of the high day. 
In the weekly Japanese candlestick chart of MSTR, below, we see clues that tell us to be cautious. The recent candlestick pattern could be a harami to mark a possible top reversal. The shares trade below the declining 40-week moving average line.
The weekly OBV line shows limited improvement after an 18-month decline. The MACD oscillator has crossed to a cover shorts buy signal but is a long way from an outright buy signal.
In this daily Point and Figure chart of MSTR, below, we can see a potential downside price target in the $228 area.
In this weekly Point and Figure chart of MSTR, below, we can see a very bullish price target in the $570 area. A trade at $250 could weaken the picture.
Bottom-line strategy: The sell signals -- a close below the low of the high day and a harami pattern -- tell me to expect further price declines for MSTR. Avoid the long side.
