Mapping the Market: Microsoft set to extend rally

By Christopher Romano

Oct 8 (Reuters) - Microsoft shares have been climbing fast since the software giant released upbeat forecasts in July and the rally may have further to run, technical analysis suggests.

Click here for a detailed technical analysis chart.

Technical analysis uses past price moves on charts to help predict where a market might go next. Microsoft's weekly charts show the stock moving back toward the record high it set in 2025. That peak is now less than 5% above current prices, and breaking through it could set off a powerful rally.

When a stock rises as quickly as Microsoft has, up more than 50% from its June lows, it often stops for a breather. Early buyers sell to lock in profits, and newcomers position for the next move higher. Microsoft did exactly this from early August until late September, when its price moved sideways within a fairly narrow range. Chart watchers call this kind of pause consolidation. They see it as a healthy sign, like a runner catching their breath before the next sprint.

This week, Microsoft shares broke out of that narrow consolidation range. That suggests the next stage of the climb could be starting.

At this point, analysts use tools that measure volatility and momentum to judge whether the rally can last.

One of these tools is called Bollinger Bands. These are two lines drawn above and below a moving average of the stock's price. When price swings get bigger, the bands spread further apart, which signals fresh momentum. That is happening with Microsoft's 20-week Bollinger Bands.

Another gauge is called Moving Average Convergence Divergence, or MACD. It compares two moving averages of different lengths to show whether buying pressure is building or fading. It's also pointing higher, which suggests Microsoft has the momentum to keep rising.

Microsoft closed on Wednesday at $529.76, according to LSEG data. To estimate how far the stock could go, analysts take the size of the recent rally leading up to the consolidation pattern and project it upward. That points to a possible target of around $700 to $750, but only if the shares can first break above their all-time high of $555.45. Past peaks, especially record highs, can slow or stop a rally because some investors choose to sell there. Rising through them often leads to faster gains.

However, the stock market generally has been volatile recently due to high oil prices and rising bond yields. If Microsoft falls back below the $465 to $480 area, that would signal the rally is over for now.

Microsoft did not immediately respond to an email requesting comment.

What the chart shows:

• Microsoft rallies sharply from June low

• A rise above all-time high of $555.45 could target $700 to $750 area

• A fall below $465 to $480 area signals end of rally for now

(Mapping the Market is a daily column written by Reuters journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations. )

(Christopher Romano is a Reuters market analyst. The views expressed are his own; Editing by Burton Frierson and Jamie Freed)