Microsoft (MSFT) Price Forecast: Breakout Signals Bullish Continuation

Recovery From March Low Sets the Foundation

Microsoft Corp. (MSFT) stock has been showing signs of recovering following the corrective low of $356.51 that was reached in late March. That low ended a $199.53 (or 35.9%) bearish correction in the stock before buyers returned. A strong rally followed, confirming strength by reclaiming both the 20-day and 50-day moving averages, and triggering a bullish reversal of the prior downtrend with a move above the lower swing high at $413.05 from March.

A high of $433.70 subsequently capped the advance near resistance around the falling 100-day moving average and the 38.2% Fibonacci retracement. A period of consolidation then followed, helping to establish support following the sharp recovery advance while allowing the prior rally to digest gains.

Bullish Pennant Formation Builds Momentum

The consolidation phase has taken the form of a bullish pennant (a small symmetrical triangle pattern) sitting near support of the 50-day moving average. In other words, prior trend resistance has now confirmed as support, which is constructive bullish behavior. Moreover, the 100-day moving average has been tested as a resistance zone during the pennant formation and the 20-day moving average is poised to cross above the 100-day average, reflecting an improvement in short-term bullish momentum. Although MSFT remains below its 200-day moving average, currently near $492.90, the recent improvement in price structure and momentum suggests that the current advance may produce a serious challenge to that resistance zone.

Breakout Levels Define Next Bullish Signals

A decisive breakout above the lower swing high of $432.70, which helps define the upper boundary of the pennant consolidation, provides an initial bullish signal, while an advance above the recent trend high of $433.70 gives a second bullish signal. That would also signal a continuation of the bullish advance from the March low.

Measured Move Targets Toward Major Resistance

There are two potential minimum targets suggested from measuring the bullish pennant. The sharp advance prior to the pennant formation totaled $59.71 (or 15.97%), and a similar move may follow a bullish breakout, with targets shown on the daily chart. Those projections point to the possibility of a test of prior support as resistance at the lower end of a double top formation that triggered to the downside in November.

The neckline of that pattern is at $492.37. When projecting forward based on price, the target estimate is around $492.76, and when measuring percentage change in price, the target is near $501.93. Notably, both potential targets align closely with the declining 200-day moving average, reinforcing the importance of that resistance zone as the recovery attempt approaches a key long-term trend inflection point.

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