Get Ready for the Relief Rally - MSFT

Here are my current thoughts on Microsoft:

The whole market has obviously been taking a beating and will likely continue to do so in the near future - However, everything happens in cycles / waves - and I believe we are approaching the time for a relief rally and I will explain why.

We can see that MSFT has been down-trending (like everything else) in what is known as a ZigZag Corrective Wave (Elliot Wave formation) which is made up of a 5-3-5 sub-wave structure (ABC).

The Fibonacci relationship with this Elliot Wave structure is as follows:

1. Wave B will retrace either (can be any of these): 50%, 61.8%, 76.4%, or 85.4% of Wave A.
- Wave B retraced between 50%-61.8%

2. Wave C targets (where it will likely end / reverse) are: 1:.618 extension, 1:1 extension, or 1:1.236 extension of Wave A.
- Wave C has already exceeded a 1:.618 extension, leaving the next two targets: 1) 1:1 extension = $136.30 and 2) A 1:1.236 extension = $127.17.
- We are currently on the 5th sub-wave within wave C - since sub-wave 3 of wave C reached a 1:1.618 extension of sub-wave 1 of wave C, it is also likely that sub-wave 5 of wave C will reach a 1:2.618 extension of sub-wave 1 of wave C which is $137.51 (a lot of sub-waves, I know).

Once we have officially bottomed / reversed, I would then target the following:

1. A .5 Fibonacci retracement of the entire ZigZag structure down
2. A .618-.65 (golden pocket) retracement of the entire ZigZag structure down
3. A .7 retracement of the entire ZigZag structure down (a personal preference of mine that has been found to be accurate)

So over the coming days, I will be watching and will likely begin to start laddering buys at these levels while paying close attention.

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