Microsoft – Weekly Analysis
Microsoft just made the move we anticipated — but does it have real momentum behind it, or is it only the beginning of a larger shift? To answer that question, it’s time for a brief look back at history.
In this update, we analyze MSFT through the lens of candlestick structure, key technical indicators, and Elliott Wave context to determine whether the latest move has the strength to continue and what the most probable path forward may look like.
CANDLES
Indeed, MSFT formed a Full Bullish Engulfing on the weekly frame. At the same time, it formed a Gravestone Doji on the daily and failed to reclaim the major weekly support. Had it closed above the 8-week EMA, the structure would have technically resembled the April 2025 bottom—but it did not.
To find a similar technical footprint, I had to roll back nearly 20 years. In May 2006, MSFT also formed a Bullish Engulfing, only to fake the move and decline for three more weeks before establishing a bottom supported by multiple technical divergences. After that occurrence, the stock rallied 77%.
Considering the current technical weakness, MSFT remains neutral on the weekly frame, pending either bullish confirmation or bearish continuation.
Elliott Wave
All Time Chart
While the February low could become the end of wave IV, the possibility of lower lows cannot be rejected.
At the same time, it remains possible that the recent decline was only wave (A) of a larger wave IV correction. For now, this scenario carries a lower probability.
Last Wave
Micro
MSFT formed a clean impulsive move off the bottom but struggled to follow through with the next wave in the same direction. While a leading diagonal could represent the first wave of wave iii of a larger degree in green, its probability is not particularly strong. Bears currently have better odds of forming an abc zigzag, with wave c potentially developing as an Ending Diagonal.
A move below $401.19 would likely negate the potential impulsive structure for wave iii and open the path to new lower lows.
SUMMARY
Microsoft delivered mixed technical signals after the recent move. The stock formed a strong weekly Bullish Engulfing but simultaneously printed a Gravestone Doji on the daily and failed to reclaim key weekly support. This combination leaves the weekly posture neutral for now, as the rally still lacks confirmation of a durable bottom.
From an Elliott Wave perspective, the move off the low appears impulsive, but the follow-through has been weak. Bulls still have a path if the structure develops into the early stages of a larger wave iii, but bears currently hold slightly better odds for a corrective abc pattern that could lead to another decline. A break below $401.19 would likely invalidate the impulsive scenario and open the door to new lower lows.
Given Microsoft’s enormous weight in major indices such as the S&P 500 and Nasdaq, its behavior could have broader implications for the entire market. A sustained decline in MSFT would likely add significant pressure to index performance, while a confirmed reversal could stabilize the technology sector and provide support for the broader market structure.
