Ferguson Stock Drops 3.05% After 7.93% Rally As Technicals Signal Consolidation

Ferguson Enterprises (FERG) declined 3.05% in the most recent session, closing at $224.48 after trading between $224.42 and $232.69. This pullback follows a substantial 7.93% surge the previous day. The analysis below integrates technical indicators to evaluate the stock’s trajectory.
Candlestick Theory
The recent session formed a bearish engulfing pattern, with the candle fully consuming the prior day’s gains and closing near its low. This suggests exhaustion after the rally. Key resistance is established at $235.55 (September 16 high), while support lies at $224.42 (September 17 low). A breach of $224.42 may test the gap zone between $215.28 and $224.17, a significant support area formed during the breakout. The $230-$235 zone now acts as overhead supply.
Moving Average Theory
The 50-day moving average (MA) is near $220, the 100-day MA around $210, and the 200-day MA at approximately $195. The current price remains above all three MAs, confirming a bullish long-term trend. The 50-day MA recently crossed above the 100-day and 200-day MAs (a "golden cross"), reinforcing positive momentum. Short-term weakness may emerge if the price nears the 50-day MA ($220), but the overall alignment (50 > 100 > 200) supports an uptrend.
MACD & KDJ Indicators
The MACD (12,26,9) shows a bullish crossover, though its histogram is narrowing following the recent pullback, indicating fading momentum. The KDJ oscillator (9,3,3) is retreating from overbought territory (K and D lines above 80 on September 16). The K line dipping below the D line signals short-term bearish pressure. This divergence—MACD maintaining a positive trend while KDJ turns down—suggests consolidation before potential resumption of the uptrend.
Bollinger Bands
Bollinger Bands (20-day SMA, 2 standard deviations) expanded sharply during the September 16 surge, reflecting elevated volatility. The price has now retreated to the lower band ($224), which may offer temporary support. Bandwidth remains wide, indicating ongoing volatility. A close below the lower band could trigger accelerated selling, while a rebound would signal resilience. The bands’ expansion favors directional momentum but warrants caution near extremes.
Volume-Price Relationship
The 7.93% rally on September 16 occurred with high volume (5.04M shares), validating breakout strength. The subsequent 3.05% decline saw lower volume (2.82M shares), implying limited conviction in the selloff and likely profit-taking. This volume divergence suggests the pullback may lack sustainability. Sustained upside would require volume expansion above the 20-day average (~1.8M shares) to confirm accumulation.
Relative Strength Index (RSI)
The 14-day RSI peaked near 75 on September 16, entering overbought territory. After the pullback, it now hovers around 62. While the exit from overbought conditions warns of near-term exhaustion, the RSI remains above the neutral 50 level, preserving bullish momentum. Investors should monitor for a break below 50, which may signal weakening momentum, though RSI is a lagging indicator best combined with price action.
Fibonacci Retracement
Applying Fibonacci retracement to the swing low of $207.64 (September 15) and high of $235.55 (September 16) identifies key levels: 23.6% ($228.97), 38.2% ($224.89), and 50% ($221.59). The current price ($224.48) aligns precisely with the 38.2% retracement ($224.89), a critical support zone. This confluence with the Bollinger lower band ($224) and September 17 low ($224.42) strengthens its significance. A sustained break below $224 could target $221.59 (50% retracement), while holding $224 may reignite upward momentum toward $229–$235.
Confluence and Divergence
Notable confluence exists at $224–225 (38.2% Fibonacci, Bollinger lower band, and gap support), making it a pivotal support zone. Bearish divergences include KDJ reversing from overbought conditions alongside MACD momentum softening, both warning of short-term consolidation. Conversely, bullish confluence arises from volume-supported breakout validation, golden cross in MAs, and RSI holding above 50. These factors collectively suggest the primary uptrend remains intact, but a period of consolidation or minor pullback appears probable before resuming gains. A decisive break below $220 (50-day MA and 50% Fibonacci) would invalidate the near-term bullish thesis.