Microsoft – Mid Term Forecast

CANDLES & MACD

The move Microsoft made this week resembles a tectonic shift, with potentially far-reaching consequences. Let’s start from the bigger picture.

The quarterly frame is on the verge of recording a MACD bearish cross of unprecedented magnitude. There have only been two such events before — in 2000 and 2008 — and both were followed by substantial declines of 66% and 60%, respectively.

If we apply a similar framework today, the implied average drawdown would be around 63%, with a potential support zone near the 50-quarter MA. This is where long-term structures stop being theoretical — and start defining outcomes.

Now let’s shift to the smaller frames. The monthly is tracking toward a Three Black Crows — something Microsoft has never recorded before. If bulls fail to step in during the final two days of March, this could also result in a break of the 50-month MA support.

The picture changes on the shorter frames. The weekly is oversold as never before, and the daily has printed nine consecutive red candles — also at extreme levels. A bounce, or even a larger rally, is highly likely in the near term.

The timing of that move is critical. Its start will have a direct impact on the monthly and quarterly closures, making it the key event to watch. Technically, however, there is still a high probability that MSFT prints at least one more lower low before the rebound begins.

Overall, Microsoft remains bearish, but the risk of a short-term—and potentially mid-term—reversal is very high.

This week’s move impacted both the candlestick and Elliott Wave structures. Now let’s turn to the wave analysis.

Elliott Wave

All Time Chart

The sharp decline in Microsoft has most likely locked in the structure of the wave developing since November 2022 — and the implications are not encouraging.

The entire 3.5-year move now fits best as an Ending Diagonal. This structure aligns with either the blue count, where the diagonal is wave 5 of III, or the purple count, where it represents wave V of (I). There is also a bullish alternative, where the diagonal acts as a leading diagonal for a larger impulse, but this scenario currently lacks meaningful technical support.

The key takeaway is independent of the count: after diagonals, price tends to return to the level of origin. In this case, a move back toward the 2022 lows around $213 — roughly a 62% decline from the ATH — would not be surprising. This aligns closely with the MACD-based projections discussed earlier.

And one more thing to keep in mind — when these structures unwind, they tend to do so quickly.

Last Wave

At the daily level, Microsoft could be close to completing wave iii (or 3) in the blue or purple count. The next move up will be instrumental — it will help define the structure and clarify which scenario is in play.

SUMMARY

Microsoft is entering a phase that stands out even by its own historical standards. The recent decline is not just another pullback — it is reshaping both the candlestick and Elliott Wave structures in a way that carries serious implications.

On the higher frames, the setup is increasingly concerning. The quarterly MACD is on the verge of recording a bearish cross of unprecedented magnitude, comparable only to 2000 and 2008 — both followed by 60%+ declines. At the same time, the monthly is tracking toward a Three Black Crows, a signal MSFT has never recorded before, with a real risk of losing the 50-month MA if bulls fail to respond immediately.

From an Elliott Wave perspective, the structure is now most consistent with an Ending Diagonal formed since 2022. These patterns tend to resolve with sharp reversals back to their origin. In this case, a move toward the $213 area — roughly a 62% drawdown from the highs — would not be out of line with historical behavior or current technical projections.

On the shorter frames, conditions are stretched. The weekly and daily are extremely oversold, increasing the probability of a bounce, possibly even a strong one. But this is where the setup becomes critical — the next move up will define whether this is a temporary relief or something more meaningful. Even then, the structure still allows for another lower low before any sustained recovery.

The implications go beyond a single stock. Given MSFT’s weight and leadership role, this setup aligns with what we discussed for the Dow Jones Industrial Average — a broader market that may be transitioning into a much deeper corrective phase. When leaders start to break in this manner, the rest of the market tends to follow.

Overall, MSFT remains bearish, with elevated risk of a sharp counter-trend rally in the near term.