Microsoft (MSFT): Bounce lacks conviction

After a downside gap to start the week, Microsoft (MSFT) rebounded from an intra-week low of 438.68, which was between 50% and 61.8% retracements of the April–July rally at 450 and 425, respectively. However, the recovery failed to produce a bullish weekly candlestick signal.

Instead, the weekly chart registered a bearish thrusting line, with the stock closing below the midpoint of the prior week’s down (black) real body. This suggests limited conviction in a tactical low and keeps the risk of continued downside from the recently completed double top in play. The double top projects toward 430, with additional support near the 61.8% retracement near 425.

On the upside, 475 (prior 38.2% retracement) and the double-top neckline at 492–493 define key tactical resistance zones. Above these levels is needed to increase confidence that MSFT is turning more bullish.

For context, the April low was marked by clear bullish weekly candlestick reversals (bullish engulfing and piercing line patterns) that saw immediate upside follow-through. Last week’s candle fell short of those signals, reinforcing the cautious near-term outlook.

Chart 1: Microsoft (MSFT): Daily candlestick chart