MSFT: Fade the First Retrace — Short the 488–490 Test for a Pullback to 478–482

Executive summary

• Regime: After peaking near 553.7 on 2025-10-28, MSFT sold off ~15% into a 468.3 low on 2025-11-21, then bounced for three sessions to 485.5. The larger timeframe remains a corrective downtrend; the near-term is a reflex rally off oversold.
• 24h bias: Expect a test/rejection near 488–490 (confluence of 23.6% Fib and R1 pivot), followed by a fade back toward 482–478. Base case is a “sell-the-rip” setup.
• Trade plan: Short via limit near 488.4 with a take-profit around 478.5. If price squeezes above ~492, risk of a push toward 500–501 rises.

Step-by-step multi-tool analysis

1. Price structure and trend

• Primary trend (daily): Lower highs and lower lows since the 10/28 top (553.7) with an impulsive decline into 11/21 (468.3). The 11/21–11/26 bounce retraces only a small fraction of the drop and remains below clustered resistance (500–522). Structure still bearish on the daily, short-term neutral-to-bullish within a countertrend rally.
• Support/resistance map: • 468–472: Recent capitulation low/hammer zone; strong support. • 477–478: S2 daily pivot vicinity; prior reaction low; support. • 481.7–485.0: S1/pivot cluster and prior closing prints; intraday balance. • 488.4–489.0: 23.6% Fibonacci retrace of 553.7→468.3 and R1 pivot confluence; near-term resistance. • 492.1–496.0: R2–R3 pivot band; supply pocket from Nov breakdown. • 500.9–501.5: 38.2% Fib and round-number psychological level; major overhead supply. • 510.9–511.0: 50% Fib and prior consolidation; key daily resistance. • 521.1: 61.8% Fib and prior distribution; major resistance.

2. Momentum and oscillators (daily)

• RSI(14): Rebounded from oversold (high 20s/low 30s) on 11/21 to the low-to-mid 40s now. Interpretation: Relief bounce underway, but RSI below 50 indicates momentum still favors sellers on rallies.
• MACD: Histogram negative but contracting; signal lines below zero. Interpretation: Bearish regime with improving short-term momentum; classic countertrend bounce, not yet trend reversal.
• Stochastics: Rising out of oversold, mid-band. Interpretation: Room to push into 488–492 before momentum risks rolling over.

3. Volatility and ranges

• Recent true range: 8–18 points; 14-day ATR roughly 13–14. Interpretation: A 10-point swing (e.g., 488 → 478) is well within a typical day’s range.
• Bollinger Bands (20,2): Price rebounded from/beyond the lower band (~475) toward the mid-band, which likely sits above (around low 510s). Bandwidth widened on the selloff and has begun to contract. Interpretation: Mean reversion in progress but the mid-band overhead implies supply into 500+.
• Keltner channels: Price still below the midline; rallies toward the upper Keltner should meet supply beneath 500 while volatility compresses.

4. Volume/participation

• Distribution and capitulation: Elevated volume on the down leg into 11/21 (31.8–34.4M) suggests capitulation. The last two green days showed improving price with mixed/moderating volume—typical of a bear rally (less sponsorship than the selloff). Interpretation: Overhead supply likely to sell strength into the first retracement levels (488–501).
• Volume profile (visual, by price): Heavy prior business in the 500–520 zone (October–early November) = overhead supply. Light volume pocket 488–496 increases the probability of rejections/whips.

5. Intraday market structure (hourly)

• 11/26–11/27 prints cluster tightly around 486.6–487.0. VWAP/POC gravitating to ~486.8. Interpretation: Acceptance/value forming just under the 23.6% Fib; buyers haven’t reclaimed that reference decisively.
• Notable outliers (516.7/454 prints) look like bad ticks or extreme anomalies; ignoring them, the tape is balanced around 486–487 with shallow excursions.
• A push to 488–489 (R1/Fib) is a natural probe level; rejection there would likely rotate the auction back through value to 482–478.

6. Fibonacci/mean reversion landmarks

• Using swing high 553.72 (10/28) to swing low 468.27 (11/21): • 23.6% = 488.46 • 38.2% = 500.91 • 50% = 511.00 • 61.8% = 521.07
• Current close 485.5 sits just below 23.6% (first resistance). Typical behavior in corrective phases is an initial stall at 23.6%, then either rejection back toward the base (478–472) or, if reclaimed with force, a push to 38.2% (~501). Given volume/oscillators, odds favor initial rejection.

7. Moving averages and trend filters

• 5–10 session EMAs: Curling up after the selloff; price is above very short-term EMA but still below the 10–20 day trend filters (likely around high 490s/low 510s). Interpretation: Micro upturn inside a broader daily downtrend—textbook rally-to-sell setup until the 20DMA is reclaimed.
• 50/200-day: Price likely still above the 200DMA but below the 50DMA. Interpretation: Intermediate trend intact long-term, but correction is not finished without reclaiming the 50DMA region (likely 510–520 zone).

8. Ichimoku (daily, qualitative)

• Price below the cloud; Kijun estimated around ~506–510, Tenkan around high 480s/low 490s. Tenkan < Kijun with a possible near-term cross up while price remains under the cloud. Interpretation: Countertrend bounce into resistance bands; edge remains to fade rallies below the cloud.

9. Candlestick/price action tells

• 11/21 hammer-like day at 468–472, followed by two accumulation days and a third up day to 485.5. A “three-day thrust” from oversold often pauses at the first Fib (23.6%) or first pivot resistance (R1), both around 488–489 here. Expect supply attempts on first tag.

10. Pivot points (classic) based on 11/26 OHLC (H=488.31, L=481.20, C=485.50)

• Pivot P ≈ 485.00
• R1 ≈ 488.81, R2 ≈ 492.11, R3 ≈ 495.92
• S1 ≈ 481.70, S2 ≈ 477.89, S3 ≈ 474.59
• Confluence: R1 sits essentially atop the 23.6% Fib (488.46). S2 aligns with a logical pullback area (≈478). This strengthens the “fade R1 to S2” idea for the next session.

11. Statistical/behavioral priors

• After a three-day bounce from a 20–30 day low with RSI<35, day 4 often shows smaller net change or mild giveback unless price gaps through first resistance on above-average volume. Given holiday-week liquidity tendencies and overhead supply, mean-reversion risk is to the downside after probing resistance.

12. Risk scenarios and path probabilities (next 24 hours)

• Base case (≈55%): Early bid pushes into 488–490 (R1 + 23.6% Fib) and stalls; sellers fade the move back toward 482–480; extension to 478 possible if S1 breaks.
• Bullish alternative (≈30%): Strong open/flow reclaims and holds above ~489; continuation toward 492 (R2) and possibly 496–501 (light-volume pocket + 38.2% Fib) before stalling.
• Bearish extension (≈15%): Weak open fails at the pivot (≈485), breaks S1 (≈481.7) quickly, and accelerates to 478–475, testing S2/S3 and the upper boundary of the 472 support band.

13. Strategy synthesis and execution plan

• Trade idea: Sell the first test/overshoot of 488–490 where multiple resistances converge (R1, 23.6% Fib, intraday overbought risk). Target the lower edge of the current value area and the S2 band (478–479).
• Rationale: • Countertrend bounce into first resistance; momentum still sub-50 RSI and MACD<0. • Confluence-based entry at 488.4 improves risk/reward and reduces slippage. • ATR supports a 10-point intraday rotation.
• Risk control (not part of the requested output fields, but operationally key): A protective stop above 501.2 (38.2% Fib vicinity) if one is used; aggressive traders could consider a tighter stop above ~492.5 (R2) if seeking higher RR.

14. What would invalidate the short bias?

• A decisive reclaim and hold above ~492 on rising volume, especially if VWAP shifts higher and dips are bought. That would open 496–501 and challenge the bear fade narrative for the next 24 hours.

24-hour price path expectation

• Expected high: 490–492
• Expected low: 477–479
• Likely close zone: 481–484
• Volatility: 10–12 point true range

Conclusion

• This is a tactically bearish setup within a larger corrective phase: sell strength into 488–490 and look for a rotation toward 478–482 over the next 24 hours.