Microsoft – Long Term Forecast
Is Microsoft finished with its drawdown — or is it too early to say?
Last week, the stock recorded technical events not previously seen on its chart. Today, we follow up on those signals and zoom out to evaluate the broader all-time structure to assess whether this correction is maturing — or just getting started.
CANDLES
The Empire of Windows closed the week with even more bearish developments than the prior one. The short-term outlook remains firmly negative. On the daily, Microsoft printed a 100/200 DMA death cross, a setup that closely resembles the 2022 configuration. The weekly may have formed a Matching Low, but that pattern requires confirmation next week to carry bullish weight. The 10D printed a Three Black Crows formation — unprecedented on this timeframe — while the 15D shows strong bearish continuation. Notably, none of the short- to mid-term frames display meaningful bullish divergence, suggesting the probability of at least one more lower low remains elevated.
The MACD deterioration is particularly concerning. Momentum weakness is more severe than what we observe in Nasdaq, let alone the S&P 500. Historically, only two comparable momentum breakdowns appear on the long-term chart — in 2000 and 2008–2009. During those cycles, Microsoft declined approximately 60% and 66% peak to trough. So far, the stock is down about 28% from its July 2025 peak, indicating there may still be downside room if the pattern continues to unfold.
Overall, MSFT remains bearish until a strong and confirmed reversal signal appears, at minimum, on the weekly timeframe.
Elliott Wave
All Time Chart
In light of the recent technical and candlestick deterioration, I revisited the all-time Elliott Wave structure of Microsoft. Several long-term indicators support the hypothesis that the July 2025 peak marked the termination of wave III, potentially of Cycle degree. Within that structure, wave 3 of Primary degree likely concluded in 2021, making the 2022–2025 advance wave 5 of III.
On the chart, I have outlined the prospective long-term channel along with potential targets for Cycle wave IV. Given that wave II extended for nearly a decade, the principle of alternation suggests that wave IV could unfold in a more time-compressed manner. The two most probable retracement zones for wave IV are: (1) a 0.236–0.50 retracement of wave III (blue rectangle), and (2) the price level corresponding to wave 4 of a lower degree (red rectangle). Additionally, the lower boundary of the long-term channel — drawn from the peak of wave II — represents a structurally significant support zone (highlighted with a thicker blue line).
Microsoft has already entered the upper target zone after a 28% decline from the July 2025 high. However, the red rectangle, implying a 37–61% retracement from the all-time high, remains technically viable if the current corrective phase continues to extend.
Last Wave
After zooming in, we can assess the smaller-degree wave structures within the ongoing correction. Since the initial decline in July–August unfolded impulsively, two primary scenarios — blue and red — remain valid.
The blue count assumes a sharp ABC correction that could conclude within a few months, if not weeks, potentially finding support near the lower boundary of the long-term channel. The red count, in contrast, allows for a more complex flat structure that could extend over several years. At this stage, both scenarios are technically viable and will remain on the table until price action provides clearer confirmation.
SUMMARY
Microsoft remains in a clear short- to mid-term downtrend. Multiple higher time frames have printed strong bearish signals, including a 100/200 DMA death cross on the daily, a Three Black Crows formation on the 10D, and continued weakness on the 15D and weekly frames. Momentum, particularly on MACD, is deteriorating at a pace not seen in many years. Importantly, there are no reliable bullish divergences yet, which keeps the probability of at least one more lower low elevated. The current momentum profile is beginning to resemble past major downturn phases in 2000 and 2008, albeit still far from their full magnitude.
From a broader Elliott Wave perspective, there is a growing case that the July 2025 high marked a significant long-term top, potentially wave III of Cycle degree. If that interpretation is correct, the current move would be wave IV. Microsoft has already entered one long-term retracement zone after a 28% decline from the peak, but deeper retracements — historically not uncommon during major corrective cycles — remain technically possible if the structure continues to unfold.
On the smaller degree, two corrective paths remain viable: a relatively sharp ABC correction that could conclude within months, or a more prolonged and complex flat that may take years to resolve. Until a strong and confirmed weekly reversal emerges, MSFT remains technically bearish, and risk management should remain front and center.
