IBM is at a critical juncture ahead of its earnings report after the market closes today.
Traders are closely monitoring the company as a bellwether in technology services and in enterprise hardware. It is also a heavily weighted component in the S&P 500 and the index's tech sector.
On positive news, its 50-day moving average at the $185 area and then the $190 resistance area would be probable upside targets. On very strong numbers, IBM could even break through lifetime highs at the $193.50 area.
However, a potential bearish pattern could become active on disappointing results. That formation is a bearish "head and shoulders" shown on the daily chart below.
On a drop below the neckline of this pattern, shown by the sloping red line, the $160 area could be the downside potential. The first big test would be at the 200-day moving average, shown in blue, last at $175.37.
IBM is trading at $181.71 this afternoon, up 0.35 percent on the day.
(Chart data provided by Thomson Reuters)
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