Bloom Energy's Stock Plunges 4.68% as Bearish Candlestick Patterns and Death Cross Signal Deepening Downtrend

Candlestick Theory

Bloom Energy (BE) has experienced a two-day decline, with a 4.68% drop over the past two sessions, suggesting short-term bearish momentum. Recent candlestick patterns, such as a bearish engulfing formation on 2025-10-06 (closing at $86.97) and a harami pattern on 2025-10-07 (closing at $86.06), indicate potential continuation of downward pressure. Key support levels appear at $83.47 (2025-10-07 low) and $82.67 (2025-10-01 low), while resistance is likely near $86.97 (2025-10-06 high). The price has repeatedly failed to hold above the $90–$95 range, suggesting a breakdown of prior bullish dynamics.

Moving Average Theory

Short-term (50-day) and long-term (200-day) moving averages reinforce a bearish trend. The 50-day MA is currently below the 200-day MA, forming a "death cross" that signals a downtrend. As of 2025-10-07, the 50-day MA is approximately $85.50, while the 200-day MA sits at $84.20, indicating the stock is in a bearish phase. The 100-day MA at $83.80 further supports this, as the price remains below all three averages. A crossover above the 50-day MA could signal a potential short-term rebound, but this would require a sustained move above $86.50 to validate a reversal.

MACD & KDJ Indicators

The MACD histogram has been negative for three consecutive sessions, with the MACD line ($-0.85) below the signal line ($-0.60), confirming bearish momentum. A bearish crossover occurred on 2025-10-06, aligning with the recent price drop. The KDJ Stochastic oscillator shows an oversold condition (K: 15, D: 22), but this is a warning signal rather than a buy cue, as the J-line ($-10) remains below zero. Divergence between the KDJ and price action is notable: while the oscillator suggests oversold territory, the price has not shown signs of reversal, increasing the likelihood of a continuation of the downtrend.

Bollinger Bands

Volatility has expanded recently, with the bands widening from a 20-day average of $8.50 to $10.20. The price is currently near the lower band ($83.47), a level often associated with oversold conditions. However, the lack of a rebound above the 20-day SMA ($85.00) suggests weak conviction. A break below the lower band could trigger further volatility, potentially testing the $80–$82 range. Conversely, a sustained close above the upper band ($95.695) would signal a bullish reversal, though this seems unlikely given the current momentum.

Volume-Price Relationship

Trading volume has surged during recent declines, with 10.8 million shares traded on 2025-10-07, validating the bearish move. The volume spike on 2025-10-06 (12.3 million shares) coincided with a 3.68% drop, reinforcing the strength of the downtrend. However, volume has not shown a significant increase during consolidation phases (e.g., 2025-10-03), indicating weak follow-through for buyers. This volume pattern suggests that the current decline is being driven by institutional selling rather than retail panic, increasing the probability of a continuation below $85.

Relative Strength Index (RSI)

The 14-day RSI is at 28, entering oversold territory, which typically suggests a potential bounce. However, this must be interpreted cautiously, as the RSI has remained in oversold conditions for three consecutive days without a rebound. A close above 35 would be necessary to confirm a reversal, but the current bearish momentum (as seen in candlestick patterns and MACD) makes this less likely. The RSI divergence (price lower lows but RSI not making lower lows) hints at a possible breakdown, with further declines to 24–28 expected if the downtrend continues.

Fibonacci Retracement

Applying Fibonacci retracement between the 2025-09-30 high ($85.67) and the 2025-10-06 low ($86.27) reveals critical levels. The 38.2% retracement level at $84.50 has already been breached, and the 50% level at $84.97 is now acting as resistance. A breakdown below the 61.8% level ($84.10) would validate a deeper correction toward $82.67 (2025-10-01 low). Conversely, a sustained close above $85.67 (the 0% retracement level) would signal a bullish reversal, though this requires a significant shift in momentum.

Backtest Hypothesis

The backtest strategy described in the provided text highlights a critical flaw in the implementation of RSI-based trading rules. While the logic intends to buy when RSI is oversold (<30) and sell when overbought (>70), the execution incorrectly set both buy and sell signals to "RSI Overbought," resulting in zero trades and a 0.00% return. This error underscores the importance of precise parameter calibration. Correcting the strategy to trigger buys at RSI < 30 and sells at RSI > 70 could yield better results, particularly if combined with other indicators like volume or Bollinger Bands. However, the benchmark’s 37.69% return from 2022 to 2025 suggests that passive strategies outperformed this approach, likely due to the stock’s prolonged bearish phase. A refined strategy incorporating Fibonacci retracement levels or moving average crossovers may improve performance by filtering out false signals during strong downtrends.