Don't Short MSFT. 2 long scenarios. Hi, I’m The Cafe Trader.
Today we’re diving into the heart of this very bullish run on MSFT. One of the key lessons I’ve learned:
Never get in the way of a strong bull trend — especially just after a breakout.
⸻
🔍 Price Action Overview:
MSFT has been respecting a strong trendline since its initial gap-up.
This has created multiple breakout trade opportunities — and we’ve just spotted another one. I’ve also outlined a secondary setup worth watching.
We recently completed a 3-bar break.
Combine that with rising volume, and this suggests a potential move to $522.23.
⏳ I’m expecting a brief consolidation (2–3 trading days) before the next leg up.
⸻
🟢 Trade Setup:
• Entry: $511.70
• Risk Level: Trade remains valid until a daily close below $500
• Reward: TP at $522.23
• Risk-to-Reward: 1:1 at entry; improves with any dip before breakout
⸻
💡 Optional Trade: Swing Trading Options
Options are about two things: price and timing.
Right now, timing looks great — but option pricing is a bit high.
The key is to go from out-of-the-money to in-the-money, and to give yourself at least 5 days on your contracts.
Here are some strike prices I’m watching (assumes expiration 7/25 or later):
• $515 Call — Entry: $2.00 or less → TP: $6.00+
• $517.5 Call — Entry: $1.30 or less → TP: $3.90+
• $520 Call — Entry: $0.70 or less → TP: $2.10+
These levels give you a strong RR if you can catch the right pullback.
⸻
🔁 Secondary Trade Idea: Bounce at $500
The $500 level is both a psychological number and a reinforced demand zone.
While it overlaps with the stop on our main setup, this trade assumes MSFT pushes higher first, then retraces to $500 for a fresh leg up.
This area will likely play a key role in future price action.
If we see a pullback into this zone with contextual selling pressure, it could offer a clean high-probability bounce.
Take profit levels would depend on how price behaves as it sells into this level — but keep this area marked.
⸻
Thanks for reading — be sure to check out my other MAG 7 analysis.
@thecafetrader
