Microsoft Bullish Uptrend Expecting Small Dip To 38.2% Fibonacci

The Microsoft stock (MSFT) remains in a solid uptrend. Recently, a strong bullish breakout occurred after a sideways, consolidation zone. 

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This bullish breakout was expected in our previous wave analysis from September. This is also indicating the potential for more upside in 2021.

Price Charts and Technical Analysis

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The MSFT stock seems to have completed an ABC (pink) pattern in wave 4 (purple) after a strong push up in wave 3 (purple). It was followed by a push up (wave 1 pink) and an ABC (grey) retracement in wave 2 (pink).

Let’s review the current situation:

  • The current breakout is likely a wave 3 (grey). 
  • The failure for price to confirm a new higher high in recent days could be the end of the wave 3 and the start of a shallow wave 4 (grey) pullback.
  • The usual retracements for waves 4 are shallow. 
  • With MSFT, the natural support zone (blue box) seems to be located at the previous resistance and the 21 ema support zone. 
  • The support zone is expected to create a bullish bounce (green arrow).
  • Any deeper pullback places the uptrend in waiting mode (yellow pause button) or invalidates the current wave outlook (red stop button).

On the 4 hour chart, a small double top is indicating the difficulty for price action to break into higher ground. Some type of retracement or consolidation is expected:

  • A bearish pullback (orange arrows) should take price back to support (blue box) and the Fibonacci retracement levels of wave 4 (grey).
  • Price action could also build a shallow and sideways ABCDE triangle pattern (grey arrows).

Eventually a bullish bounce (green arrows) or breakout (blue arrow) is expected to take price action to higher levels again as long as price stays above the 61.8% Fib and especially the support trend line (green). Main targets are $250, $260, and $275.

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Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit ...

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