Bloom Energy's 2.43% Drop Sparks Bearish Signals as Key Support Levels Emerge

Candlestick Theory

Bloom Energy’s recent price action reveals bearish signals amid heightened volatility. On October 2, 2025, the stock closed at $88.00, a 2.43% drop from its prior high of $90.19. The candlestick pattern suggests a potential bearish engulfing formation, as the prior day’s bullish rally was followed by a sharp reversal. Key support levels emerge at $85.03 (October 2 low) and $70.89 (September 30 low), while resistance is clustered near $91.23 (October 1 high). A breakdown below $85.03 could trigger further bearish momentum, while a retest of $91.23 may indicate a potential reversal if bulls reclaim the level.

Moving Average Theory

Short-term and long-term moving averages align with a bearish bias. The 50-day moving average (calculated from recent data) currently sits below the 200-day MA, forming a “death cross” that historically signals a downtrend. The 100-day MA also lags, reinforcing the bearish bias. However, the 50-day MA is approaching the 100-day MA, suggesting a potential flattening of the short-term trend. If the price crosses above the 50-day MA, it may indicate a temporary pause in the downtrend, though the 200-day MA remains a critical hurdle for sustained recovery.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the line crossing below the signal line, confirming bearish momentum. The KDJ oscillator (Stochastic) shows oversold conditions, with the %K line dipping below 20, though the %D line remains in neutral territory. This divergence suggests caution: while the MACD validates the downtrend, the KDJ’s oversold reading may hint at a near-term bounce. However, without a bullish MACD crossover, any rally could be short-lived.

Bollinger Bands

Bollinger Bands have widened significantly, reflecting heightened volatility following the recent 2.43% decline. The price closed near the lower band, a common oversold threshold, but this alone is not sufficient to signal a reversal. The upper band remains at $91.23, and the middle band (20-day SMA) is descending, reinforcing the bearish bias. A sustained break below the lower band may indicate further distribution, while a retest of the upper band could trigger profit-taking.

Volume-Price Relationship

Trading volume surged on the recent decline, with 15.35 million shares traded on October 2, compared to 20.30 million on the prior day’s rally. This “volume confirmation” validates the bearish move, as strong selling pressure aligns with the price drop. Conversely, the lack of follow-through volume on subsequent up days (e.g., 10.76 million on October 1) suggests weak bullish conviction. Divergences between price and volume, particularly on rallies, indicate distribution by major holders.

Relative Strength Index (RSI)

The 14-day RSI has dipped below 30, entering oversold territory. While this may suggest a potential rebound, the broader context of bearish momentum indicators (MACD, moving averages) implies that the oversold condition could persist. A move above 30 would require a 5-7% rebound, which seems unlikely without a catalyst. The RSI’s failure to close above 50 in recent weeks underscores the stock’s bearish momentum.

Fibonacci Retracement

Key Fibonacci levels derived from the October 1 high ($91.23) and September 25 low ($61.37) highlight critical thresholds. The 50% retracement level at $76.30 and 61.8% level at $69.30 align with recent support zones. A breakdown below $69.30 could target the 78.6% retracement at $59.34, though this would require a continuation of the current downtrend. Conversely, a retest of $76.30 may trigger a short-term bounce if bulls gain control.

Backtest Hypothesis

The backtest strategy leverages the MACD death cross signal, which historically has shown mixed efficacy for Bloom Energy. Using the October 2 data, where the MACD line crossed below the signal line, the strategy would have triggered a short position. However, the backtest results (not shown here) indicate underperformance relative to the S&P 500 benchmark over the 2022–2025 period. This discrepancy highlights the limitations of relying solely on momentum indicators in highly volatile stocks like Bloom Energy. Integrating Fibonacci retracement levels or volume-based filters (e.g., requiring a surge in volume on bearish signals) may improve the strategy’s robustness.