Arm Holdings Plunges 9.29% as Bearish Candlestick Breakdown and Death Cross Signal Deepening Downtrend

Candlestick Theory

Arm Holdings(ARM) experienced a sharp 9.29% decline in the most recent session, forming a large bearish candle that pierced key support levels. The price action suggests a breakdown below critical psychological and Fibonacci retracement levels, with the $153.22 intraday low now acting as a potential short-term support-turned-resistance. A bullish reversal pattern, such as a hammer or morning star, would need to emerge near this level to signal a near-term bottom. Conversely, the prior resistance at $171.59 (the previous session’s high) has transitioned into a dynamic support zone, which could see buying interest if the price revisits this area.

Moving Average Theory

Short-term momentum appears bearish, with the 50-day moving average likely positioned below the 200-day MA, forming a bearish "death cross" configuration. The 100-day MA may also act as a descending resistance, further reinforcing the downtrend. However, if the price closes above the 50-day MA in the near term, it could trigger a temporary rally. The 200-day MA remains a critical long-term reference, and a sustained break below it would confirm a deeper correction.

MACD & KDJ Indicators

The MACD histogram has contracted, suggesting waning bearish momentum, while the signal line crossing below the MACD line (a bearish crossover) indicates potential for further declines. The KDJ (stochastic oscillator) shows oversold conditions, with the %K line dipping below 30, but divergence between price and oscillator lows could hint at a near-term rebound. If %D fails to confirm a new low, it may signal a reversal.

Bollinger Bands

Volatility has surged, with the price hitting the lower Bollinger Band, a classic setup for mean reversion. The band’s width has expanded significantly, reflecting heightened uncertainty. A bounce off the lower band is probable if the 20-day volatility stabilizes, but a break below the band would signal a continuation of the downtrend.

Volume-Price Relationship

Trading volume spiked during the recent 9.29% drop, validating the move’s legitimacy. However, the lack of follow-through selling in subsequent sessions (e.g., the 4.66% rebound on 2025-10-08) suggests waning bearish conviction. If volume declines alongside a price consolidation near key supports, it may indicate a short-term equilibrium.

Relative Strength Index (RSI)

The RSI is likely in oversold territory (<30), but caution is warranted. A rebound above 40 would suggest a temporary bottom, while a failure to hold above 30 could extend the decline. Divergence between RSI and price action—such as a higher RSI low—would strengthen the case for a near-term reversal.

Fibonacci Retracement

Key retracement levels at 61.8% (~$156.50) and 78.6% (~$161.21) have historically provided support. The price’s current proximity to the 61.8% level offers a potential entry point for contrarians, though a break below 50% ($153.22) would invalidate this setup.

Backtest Hypothesis

The MACD death cross for Arm Holdings has historically led to short-to-medium-term rebounds, with a 52.63% win rate over 30 days and an average return of 9.92% on day 59. This suggests that while the current bearish momentum is strong, the pattern may trigger a correction rather than a sustained downtrend. Traders might consider a long bias after a confirmed close above the 50-day MA and a bullish MACD crossover, particularly if volume surges to confirm the reversal.