Microsoft Stock Analysis — Learn Supply and Demand Trading

If you want to learn to trade stocks using supply and demand trading and price action trading, Microsoft stock is giving us a great real-world example right now.

And the interesting part is that this Microsoft stock move didn’t start today. We identified the opportunity months ago, when Microsoft was falling and many traders were focused on the bearish move. Instead of chasing price, we were waiting for Microsoft stock to reach a much bigger monthly imbalance.

Let’s start with the lower timeframes and then work our way up, because that’s where the difference between short-term stock trading, swing stock trading and long-term stock trading becomes very clear.

As Microsoft stock declined at the beginning of 2026, the lower timeframes were clearly bearish. If you were only looking at those charts, there wasn’t much reason to be bullish.

But this is one of the biggest mistakes traders make when they learn to trade stocks. They become so focused on what price is doing right now that they completely ignore where price is located on the bigger timeframes.

And when we move to the monthly chart, everything changes.

Months ago, I shared this monthly demand level on Microsoft stock around $395 per share. This was a strong monthly imbalance and an area where I expected buyers to take control eventually.

Microsoft stock reached that monthly demand level in February 2026.

And look at what happened next.

Microsoft stock has rallied approximately $100 per share, or around 30%, since that monthly imbalance took control.

That’s exactly why understanding supply and demand trading is so important.

We weren’t trying to predict the exact candle that would turn Microsoft stock around. We identified an imbalance where demand significantly exceeded supply and waited for price to return to that area.

That’s a completely different approach from chasing indicators or buying Microsoft stock simply because it suddenly starts moving higher.

This was originally a swing and long-term stock trading idea. The monthly timeframe gave us the context, while the lower timeframes allowed us to see how the bullish reaction developed.

And this is something you need to understand when you learn to trade stocks using price action and supply and demand: the timeframe you’re trading changes everything.

An intraday stock trader could have taken several bearish trades while Microsoft was falling toward $395. A swing stock trader or long-term stock trader could instead be waiting for that decline to bring Microsoft stock into monthly demand.

Both traders could potentially be right because they’re trading completely different timeframe imbalances.

But now the situation has changed again.

Microsoft stock has already rallied roughly 30% from the monthly demand level. After such a strong bullish reaction and approximately a $100 move higher, I’m no longer interested in chasing Microsoft stock at these prices.

In fact, I’m expecting a bearish leg to develop after this strong rally.

That doesn’t necessarily mean the entire bullish structure has finished. Markets don’t normally move vertically forever. Price expands, retraces, creates new imbalances and then decides whether the dominant trend can continue.

So now I’ll be watching the lower timeframes to see where fresh supply develops and how Microsoft stock reacts from these higher prices.

And this is where price action trading and supply and demand trading work together.

The monthly demand level gave us the location. Price action showed us the reaction. And now price action will help us understand whether sellers are beginning to regain control after this powerful Microsoft stock rally.

The important lesson isn’t that Microsoft stock rallied $100.

The important lesson is why we were watching $395 before the rally happened.

That’s the skill you want to develop when you learn to trade stocks. Instead of reacting to price after everyone can see the move, learn to identify the supply and demand imbalances that could create the next move before price gets there.

Microsoft stock has given us a textbook example: monthly demand around $395, a powerful bullish reaction, roughly a 30% rally, and now we’re watching for the next bearish leg.

If you want to learn more about supply and demand stock trading, price action trading, swing stock trading and long-term stock trading, subscribe to the channel because I’ll continue breaking down real markets and showing you how these imbalances play out over time.