Microsoft (NASDAQ: MSFT) is flashing major long-term warning signals after a sharp and aggressive selloff pushed the stock into a critical technical zone.

According to insights from TradingShot in a February 20 TradingView post, the recent decline followed a sell signal issued on January 27 when shares were trading at $481.26, with a $410 downside target.

That target was reached almost immediately on the next weekly candle, highlighting the intensity of the selling pressure now gripping the stock.

Notably, Microsoft is trading at $397.29 after falling 7.67% on the latest monthly candle, decisively breaking below the $410 level and now testing a key long-term support zone.

According to the analyst, the focus is on the 50-month moving average (MA), which has acted as Microsoft’s primary structural support since December 2011 and sparked bullish reversals in November 2022 and April 2025. 

MSFT stock key targets 

A confirmed monthly close below this level would mark a major technical breakdown. If it fails, the next key support lies at the 100-month moving average near $300. That area also aligns with the 0.618 to 0.786 Fibonacci retracement of the entire post-2008 rally and would represent the largest correction within the long-term upward channel established since the financial crisis.

At the same time, MSFT’s monthly Relative Strength Index (RSI) is testing the crucial 44 support level, which has held since June 2010. A break below would open the path toward the 30 oversold threshold, a move that could coincide with price sliding toward the 100-month moving average around $300.

The outlook compounds matters for Microsoft stock, which has declined roughly 15% year-to-date in 2026, making it the weakest performer among the Magnificent Seven group.

The pullback accelerated after the company’s fiscal Q2 earnings in late January. Despite beating estimates with 17% revenue growth to $81.3 billion and strong cloud performance, a $37.5 billion capital expenditure figure, largely for AI data centers and GPUs, sparked concerns about delayed returns and potential margin pressure.

Analysts note that while demand for Microsoft’s AI and cloud services remains robust, the heavy spending has fueled skepticism. Some investors, including major funds, have trimmed positions amid fears that AI monetization may lag behind buildout costs.

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