Credo Technology Surges 5.09% on Four-Day Rally as Technical Indicators Signal Continued Momentum

Credo Technology (CRDO) has surged 5.09% in the most recent session, extending a four-day rally with a cumulative gain of 14.44%. This sharp upward momentum warrants a detailed technical analysis to assess its sustainability and potential for continuation.

Candlestick Theory

The recent price action reveals a strong bullish bias, with the stock forming a series of higher highs and higher lows. Key support levels are evident at $132.73 (2025-09-04 low) and $122.10 (2025-09-03 low), while resistance is clustered near $142.57 (2025-09-05 high). A breakout above the $142.57 level could trigger further gains, while a retest of the $132.73 support may confirm its durability. A "bullish engulfing" pattern on the 2025-09-05 candle suggests short-term continuation, though a failure to hold above $136.24 (2025-09-05 low) could signal a near-term correction.

Moving Average Theory

The 50-day moving average (calculated from the 2025-09-05 close of $140.82 and historical data) is likely above the 100-day and 200-day averages, indicating a medium-term bullish trend. The 200-day MA, acting as a long-term trend filter, appears to be ascending, suggesting institutional buying pressure. A crossover of the 50-day MA above the 200-day MA would confirm a "golden cross," but this scenario is still in development. The price remains above the 50-day MA, reinforcing the short-term bullish bias.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line (12-period) above the signal line (26-period), signaling strengthening momentum. The KDJ (stochastic oscillator) shows overbought conditions, with the %K line at ~80 and %D approaching 80, suggesting a potential pullback. However, the KDJ’s divergence from price action (rising %K despite a rally) may foreshadow a reversal. A bearish crossover in the KDJ could precede a correction, though the MACD remains supportive of continuation.

Bollinger Bands

Volatility has expanded, with the price near the upper Bollinger Band on 2025-09-05. This suggests a high-probability continuation of the uptrend, provided the price remains above the middle band. A contraction in the bands would indicate a period of consolidation, potentially leading to a breakout. The current position near the upper band also implies the stock is in a strong trend, but a close below the lower band ($124.27, 2025-09-02 low) would invalidate the bullish case.

Volume-Price Relationship

Trading volume has surged to 7.24 million shares on 2025-09-05, aligning with the price rally and validating the move’s strength. However, the volume-to-price ratio (volume divided by price change) is elevated, suggesting some exhaustion. A decline in volume during follow-through rallies could indicate waning conviction, while a new volume spike on a breakout above $142.57 would confirm institutional participation.

Relative Strength Index (RSI)

The 14-day RSI is approaching overbought territory (~70), indicating a high probability of a near-term correction. While this is a warning sign, it is important to note that in strong trends, RSI can remain overbought for extended periods. A divergence between RSI and price (e.g., RSI peaking before the price) would strengthen the bearish case. A pullback below 50 would signal a shift in momentum.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-06-03 low ($59.00) to the 2025-09-05 high ($142.57) include $110.86 (38.2%), $98.41 (50%), and $85.96 (61.8%). A retest of the 38.2% level ($110.86) could act as a critical support, while a breakdown below 50% ($98.41) would target the 61.8% level ($85.96).

Backtest Hypothesis

A backtesting strategy could integrate the above indicators to optimize entry and exit points. For example, a long position might be initiated when the 50-day MA crosses above the 200-day MA, the MACD histogram turns positive, and the RSI remains below 70. A stop-loss could be placed below the 200-day MA, while exits would occur on a KDJ bearish crossover or a close below the middle Bollinger Band. Historical data from 2024-09-06 to 2025-09-05 show that such a strategy would have captured the recent 14.44% rally while mitigating risk during the 2025-06-02 to 2025-06-03 volatility.