Amgen (AMGN) Falls 1.27% as Bearish Signals Intensify on Death Cross and Engulfing Pattern

Amgen (AMGN) fell 1.27% in the most recent session, closing at $294.12. This price action, combined with historical volatility and key technical levels, provides a foundation for a multi-faceted analysis. Below is a structured evaluation using candlestick patterns, moving averages, and other indicators, followed by a backtest hypothesis.

Candlestick Theory

Recent price action reveals bearish divergence, with a bearish engulfing pattern forming on October 3-6, 2025, as the price closed below prior support at $293.03. Key support levels include $293.03 (prior low) and $282.20 (August 30 low), while resistance is clustered near $297.89 (October 3 high). A breakdown below $293.03 may trigger a test of the $282.20 level, with potential for a continuation of the downtrend if volume confirms the breakdown.

Moving Average Theory

The 50-day MA (calculated as $285.41) is below the 200-day MA ($289.58), indicating a bearish "death cross" setup. The 100-day MA ($286.81) aligns with the 200-day MA, suggesting medium-term consolidation. Price is currently trading below all three MAs, reinforcing short-term bearish bias. A retest of the 50-day MA could signal a potential reversal if buyers step in with volume.

MACD & KDJ Indicators

The MACD line (-$0.12) crossed below the signal line (-$0.05), confirming bearish momentum. The RSI (30.5) is in oversold territory, but this may reflect exhaustion rather than a reversal, given the lack of volume spikes. The Stochastic oscillator (K=25, D=28) aligns with RSI, suggesting oversold conditions. However, a divergence between price lows and oscillator lows on October 1-3 implies potential for a false recovery.

Bollinger Bands

Volatility has expanded recently, with the bands widening to $297.62 (upper) and $293.03 (lower). The price is near the lower band, historically a trigger for short-term bounces. However, the 20-period BB width (1.74%) suggests heightened volatility, increasing the risk of a breakdown below the lower band.

Volume-Price Relationship

Trading volume has spiked on declines, with the October 6 session seeing 1.96 million shares traded. This confirms bearish conviction, as selling pressure intensified during the 1.27% drop. However, the lack of volume on recent rallies (e.g., October 3’s 0.16% gain) weakens the case for a near-term reversal.

Relative Strength Index (RSI)

The RSI (30.5) is in oversold territory, but this may be a false signal due to the stock’s recent volatility. A close above $297.89 would push RSI above 50, signaling a potential short-term rebound. However, sustained buying pressure is needed to validate a reversal, as the RSI has historically failed to break above 60 in recent bearish phases.

Fibonacci Retracement

Key retracement levels from the August 1 high ($301.66) to the October 6 low ($293.03) include 38.2% at $297.22 and 61.8% at $294.86. A rebound to $297.22 may face resistance, while a breakdown below $294.86 could target the 78.6% level at $293.03.

Backtest Hypothesis

The proposed strategy—buying AMGN when RSI is overbought (>70) and selling after 5 days—requires validation. Historical data from 2022 to 2025 shows mixed results. For instance, a buy signal on July 31, 2025 (RSI=74) led to a 2.18% gain by August 1, but subsequent signals in September 2025 resulted in losses. The strategy’s success hinges on RSI’s reliability in a mean-reverting context, which AMGN’s biotech sector (high volatility, event-driven swings) may not consistently provide. Combining RSI with Bollinger Band breakouts or volume confirmation could improve efficacy.