Microsoft’s stocks declined by nearly 3 $ from 41.65 to 38.85. However there seems to be no reason to worry, because in our opinion, the uptrend is ready to resume. On the chart below you can see an unfinished impulse wave, which by far has made its fourth wave.
Fifth waves are difficult to predict, unless there is a clear, easily recognizable corrective pattern in wave 4. On the next chart we will examine that 3-dollar decline in the white rectangle to see if it is corrective in nature.
It appears to be a simple zig-zag correction with an ending diagonal in wave C. Furthermore, the RSI indicates that the bears are running out of power. Considering the 1-hour chart, this zig-zag in wave (4) fulfills the guideline of alternation, since wave (2) is a sideways correction in the form of a running flat. In conclusion, we expect to see prices of 42 dollars per share for Microsoft during the months ahead.