MSFT: Wave (2) Retest Before a Potential Wave (3) ExpansionMicrosoft CorporationBATS:MSFTpricewerkMSFT | Microsoft | 1D Core Idea MSFT should be classified as an early bullish continuation setup, but not as a fully confirmed expansion yet. The larger correction appears to have bottomed near 344.351, followed by a first impulsive move into 466.956. The current pullback is best read as a deep Wave (2) retest, directly into Fibonacci support and the upper VWAP area. As long as 344.351 holds, the structure remains constructive. Elliott Wave Structure The preferred count treats the rally from 344.351 to 466.956 as Wave (1). The current decline is labeled as Wave (2). This correction has already reached the deeper retracement zone: 410.661: 50.0% retracement 397.561: 61.8% retracement 378.911: 78.6% retracement Price is now reacting from the lower part of this Wave (2) zone. That is technically constructive, but the next impulsive phase still needs confirmation. VWAP Structure The upper VWAP is the key support line for the current setup. MSFT is testing this VWAP directly inside the Wave (2) retracement zone. This creates a relevant confluence area around 378 to 398. The lower VWAP sits much deeper and acts as the larger structural backup. If price loses the upper VWAP and breaks below 344.351, the bullish count would fail and the market could rotate toward the lower VWAP. Key Levels 378.911: 78.6% retracement and active Wave (2) reaction zone 397.561: 61.8% retracement 410.661: 50.0% retracement 344.351: invalidation of the preferred bullish count 466.956: first confirmation level for Wave (3) 555.222: higher-timeframe confirmation 595.675: 2.0 extension target 664.902: 2.618 extension target Bullish Scenario If MSFT holds the 378 to 398 zone and reclaims 410.661, the Wave (2) low becomes increasingly credible. The first real confirmation comes above 466.956. A breakout above that level would suggest that Wave (3) has started. Above 555.222, the higher-timeframe bullish continuation would be confirmed. The next upside projection sits between 595.675 and 664.902. Bearish Scenario If MSFT fails to hold the upper VWAP and breaks below 344.351, the preferred bullish count is invalidated. That would mean the move into 466.956 was not a reliable Wave (1), and the market would likely need a deeper corrective reset toward the lower VWAP structure. Trading Interpretation This is a potential Wave (2) completion setup, not yet a confirmed Wave (3) breakout. The location is strong because price is reacting from deep Fibonacci support and the upper VWAP. The confirmation, however, is still above price. The clean sequence would be: hold 378 to 398, reclaim 410.661, break 466.956, then target 555.222 and higher. Conclusion MSFT is correctly classified as a deep Wave (2) retest within a potentially bullish continuation structure. The setup remains valid above 344.351. Above 466.956, Wave (3) gains confirmation. Above 555.222, the larger bullish expansion opens toward 595.675 to 664.902.