MSFT | Deep Correction Complete—Bulls Target The Liquidity Above 
By analyzing the
#MSFT (Microsoft) chart on the 4H timeframe, we can see that the broader trend remains bullish, and the deep correction that shook out weak hands looks to be complete. Price has reclaimed structure off a key demand area, and the setup now points toward the liquidity resting overhead.
4H Timeframe On the 4H, the bigger picture is an uptrend that went through a deep corrective phase inside a descending channel. Two things then flipped the script: price printed an internal CHoCH (iCHoCH), signaling the correction was losing steam — and then, on the push lower into the Demand Zone (
$344.31 – $365.42), it executed a clean liquidity sweep, running the stops resting below before launching higher with force. That's the classic trap: take the liquidity, then reverse. Since reclaiming from demand, price has been grinding higher and is now building a smaller corrective channel after the last leg up, trading around
$394.03. A break of this corrective channel to the upside is the trigger that opens the door toward the stacked buy-side liquidity (BSL) overhead at
$466.21,
$489.53, and ultimately
$555.39. The entire bullish thesis stays valid as long as price holds above the Protected Low at
$344.31, with deeper structural support at
$310.25.
The Bias My base case is bullish continuation. The trend is up, the deep correction completed with an iCHoCH and a liquidity sweep into demand, and price has already reclaimed with strength. The trigger is a break of the current corrective channel to the upside — on that break, the draw is toward the BSL pools above ($466.21 → $489.53 → $555.39). In my view, as long as MSFT holds above the Protected Low ($344.31), every dip remains a buying opportunity rather than a reversal — the sweep already did its job of clearing the sellers.
Fundamental Backdrop The bullish structure lines up with a compelling fundamental setup. Microsoft has been the laggard of the "Magnificent Seven," down roughly 20% year-to-date and about 29% from its record high, as investors punished the sector over fears that AI could disrupt legacy software — but that sell-off has left the stock at its cheapest forward multiple since 2023 (around 20–22x earnings), which many analysts frame as a rare entry point. The next major catalyst is fiscal Q4 earnings on July 29, and sentiment into it is constructive: the prior quarter beat with $81.3 billion in revenue (up 17% YoY), and analysts widely expect the print to spark a recovery. The Street is overwhelmingly bullish — the average target sits around $559–592 (well above current price), with fresh Buy reiterations citing Azure and M365 tailwinds plus underappreciated earnings power, and Microsoft just overhauled its cybersecurity unit to monetize AI-driven threats. The risk to respect: the enormous AI capex bill (FY2026 guidance up near $190 billion, ~61% higher YoY) is growing faster than revenue and could pressure margins — so the July 29 commentary on spend and Azure growth is the real test. But with the valuation reset and earnings imminent, the fundamental picture aligns with the bullish technical read.
