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Setting the Stage for the Next Decade
For anyone tracking Microsoft's stock over the long haul, the price action since the tech bubble burst has been fascinating, and the Elliott Wave Principle offers a clear map of where the company might be headed next. This analysis focuses on the monthly chart, giving us a multi-year perspective, which is crucial for understanding the larger trend currently in play.
The Big Correction is Over: Wave [2] Complete
Looking back at the historical chart, MSFT peaked at $59.97 in January 1999. What followed was a massive, decade-long bear market—a major correction that ultimately formed a complex Blue A-B-C structure.
This entire corrective phase found its final bottom at $14.87 in March 2009. From an Elliott Wave perspective, this low marked the definitive completion of the large, long-term Red Wave [2]. The significance of this is monumental: the stock essentially spent ten years correcting the initial move higher, and with Wave [2] finished, the stage was set for the powerful, multi-year rally of Red Wave [3].
In Elliott Wave terminology, Wave [3] is typically the strongest and longest wave in a five-wave impulsive sequence. The ultimate target for this massive Red Wave [3] is projected to be around the $150 area or potentially even higher. This forecast reflects a strong bullish outlook for Microsoft over the coming years as this primary wave unfolds.
🧠Navigating the Current Impulsive Wave [3]
Since the 2009 low, MSFT has been climbing steadily, confirming that the new uptrend, Red Wave [3], is well underway. We're now breaking down the structure within this large impulsive wave to identify the current phase and where the immediate opportunities and risks lie.
Currently in Green Wave 4 Setup
The internal count of this primary uptrend shows that the price is currently working its way through the structure we’ve labeled as Blue Wave 1 of the even larger Red Wave [3].
Right now, the price action is reflecting the final stages of the smaller, but significant, impulse that started after the 2009 low. Specifically, we believe the stock is in the process of completing Green Wave 5 of Blue Wave 1 of Red Wave [3].
Based on typical wave relationships, the immediate upside target for this current Green Wave 5 is near the $70 area. This level is where we expect the stock to hit its first major psychological and technical resistance point. Reaching this target would mark the completion of the entire Blue Wave 1 rally that started back in 2009.
The Expected Pullback: Green Wave 4 Retracement
Once the price reaches the $70 area and Blue Wave 1 is complete, the Elliott Wave Principle dictates that a correction must follow. This next phase will be Blue Wave 2 of the larger Red Wave [3].
For traders and long-term investors, the expected retracement from this $70 peak is a crucial area of interest. A standard correction will likely bring the price back down to test prior support levels.
The most critical zone to watch for this pullback is around $37.50. Why this specific level? In the smaller degree wave count, Green Wave IV concluded near that price. According to Elliott Wave guidelines, corrective waves often test the territory of the preceding fourth wave of one lesser degree.
Therefore, the $37.50 area represents the high-probability completion zone for Blue Wave 2. This upcoming decline is not a reversal of the trend but rather a necessary recharge before the primary long-term trend can resume.
🎯 Final Outlook: Resumption Towards $150
After the healthy Blue Wave 2 correction finishes near $37.50, the long-term bullish trend is expected to kick into high gear. The next phase will be the start of the powerful Blue Wave 3 (which is still part of the massive Red Wave [3]).
This is the phase that should propel the stock toward the ultimate long-term target of $150 and potentially beyond.
Key Takeaway for Investors
The overall outlook for Microsoft remains extremely bullish in the context of this long-term Elliott Wave count.
- Immediate Focus: Look for a push up to the $70 resistance to complete the current rally phase (Blue Wave 1).
- Strategic Entry: Be prepared for a significant pullback toward $37.50 (Blue Wave 2). This area will represent a prime long-term buying opportunity before the major Blue Wave 3 starts.
- Long-Term Goal: Once the correction is over, the path is clear for a multi-year advance toward the $150 target for Red Wave [3].
As with all technical analysis, this forecast is a guide, not a guarantee. Disciplined risk management is always essential. The structural integrity of this bullish outlook remains valid as long as the price continues to respect the key wave movements and relationships outlined above. Macroeconomic shifts or fundamental company news could, of course, cause the patterns to shift, so constant monitoring is advised.
Trading Wisdom of the Day
"Charts never lie — emotions do."
Crucial Risk Management Advice
Crucial Advice: Effective trading is based on disciplined risk management, not prediction certainty. Always use a firm stop-loss to protect your capital. Macroeconomic news, particularly from the Federal Reserve or the European Central Bank, can override any technical pattern instantly.
About the Author
Ghulam Muhiuddin, Certified Technical Market Analyst
Experience: This analysis reflects the insights gained from 18 Years of consistent market analysis and forecasting, specializing in the application of the Elliott Wave Principle and advanced technical structures.
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