Microsoft’s Market Puzzle — The X2 Conundrum

After a corrective decline from Microsoft’s All-Time High at $467.70, we’ve been tracking a potential complex structure unfolding — and the recent price behavior fits right into a well-formed W–X–Y–X–Z pattern.

In this latest move, we may be witnessing the final stages of the second X-wave (X2) — a sharp and extended rally that reached $462.52, pushing marginally above the first X-wave at $456.16.

Now before that raises eyebrows — yes, X2 is allowed to extend above X1. In a complex correction, X-waves are connectors, not trends. They can retrace deeply or even overshoot previous pivot highs — especially in the form of an expanded zigzag or running correction. It’s rare, but perfectly legal in Elliott’s chaotic universe.

But this leads to a question:

Is this rally impulsive… or is it bait?

If the move from $344.79 is truly impulsive, then we’re potentially mid-way through a new bullish leg — with wave 3 ending at $462.78, and a mild wave 4 correction into the $437–$421 zone (0.236–0.382 retracement) expected before another pop higher. This view only holds as long as price remains below the ATH at $467.70 — our immediate invalidation level.

However, momentum indicators raise suspicions:

• RSI is showing a clear bearish divergence — price made a new high, but RSI didn’t confirm it.
  
• MACD has started rolling over, with a fading histogram — signaling potential exhaustion in this move.
  

This sets the stage for an alternate, and perhaps more compelling, scenario:

The rally from $344.79 to $462.78 is not a new trend — it’s the X2 wave in a still-unfinished W–X–Y–X–Z combo correction.

If this is the case, then what comes next is Wave Z — the final leg down to complete the entire corrective structure.

And here’s the Elliott rulebook:

• Wave Z must be a 3-wave structure (likely a zigzag)
  
• It often mirrors the size of Wave Y or contracts modestly
  
• Projection for Z from the X2 top targets the $393–$351 zone, which represents a 0.618–1.0 retracement of the Wave Y decline
  

This zone becomes the primary downside watch area, should price reject from this level and fail to break above $467.70.

Summary:
We’re at a critical junction.
The rally from $344.79 could either be:

• An impulsive move needing a wave 4 pullback
  
• Or a complex X2 wave — ready to hand over the baton to Wave Z

Both scenarios require careful tracking of structure, MACD, RSI, and price action near the retracement zone and the ATH invalidation level.