Microsoft ($MSFT) has experienced a 27% increase since April, following a strategic entry at the Blue Box area. The stock completed its corrective decline at this point, suggesting an unfinished pullback with potential for short-term decline.

Current analysis indicates that Microsoft is in a correction phase, following an Elliott Wave Zig Zag Pattern, with expectations for weakness before another buying opportunity. The key price target is the 355.33 area, where a 3-wave bounce is anticipated, offering risk management and potential profit booking.

Long positions entered at the Blue Box area have become risk-free after a price rally from the 338 low to the 450 area. We aim to move stop losses to breakeven and secure partial profits as long as the price holds above 338, suggesting potential for further increases.

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The recent surge of nearly 27% from Microsoft—following accumulation near the marked exhaustion zone—has offered measurable gains, reinforcing the strength of high-probability entry areas when aligned with pattern completion. This rebound from the 338 level to highs around 450 has validated the original upward thesis but now shifts focus toward managing open risk, especially as shorter-term weakness begins to emerge.

The current pullback, which is showing features of a classic Elliott Wave Zig Zag correction, suggests that price action may remain subdued in the near term. The expected 3-wave structure often brings temporary relief within broader trends and is pointing towards retracement into the 355.33 region. This level stands as the next area where buyers may see renewed interest, though not necessarily with the same momentum we observed earlier in April.

At this stage, with long exposures already risk-free after strong upward movement, it’s practical to consider removing partial positions or adjusting stop levels further—locking in any open profit while still allowing some room for price to develop. Protecting the 338 area should be the focus in terms of maintaining any bullish outlook further out. If price breaks that level convincingly, the corrective move has likely deepened, and staying flexible will matter more than confirmation-based trading.

Short-term traders looking for fresh setups can keep attention on price as it descends toward our identified zone. We expect the upcoming bounce to offer tight management potential—being less about aggressive accumulation and more about quick rotations or partial re-engagements. In conditions like this, understanding where you’re wrong matters as much as being right—entries need to be balanced with protective exits nearby.

The structure of this corrective move doesn’t imply collapse, but it shouldn’t be misread as a strong-bottoming signal yet either. Corrections of this nature often unfold with overlapping waves that slow momentum and tempt early re-entries. We’ll be waiting for more precise confirmation from price action near expected retracement levels rather than jumping ahead based on hope for continuation.

Each move, each wave, carries its own set of probabilities. Recent behaviour, especially with how price has respected mapped zones, reinforces the utility of pre-planned trade areas marked with timing labels. But with the market shifting pace, it’s less about finding every opportunity and more about measuring the validity of each signal against new price behaviour. We watch and adapt, rather than commit prematurely.

Having rules ahead of time—and following them without debate when levels are hit—remains the highest form of discipline here. Holding on tightly when price edges toward invalidation zones has never served well in these sequences. We focus on the next key level. Let structure lead. Sensible stops and proper sizing will matter more in the coming legs of this correction.