HPQ Stock Surges 4.36% on Bullish Technical Signals, Key Resistance and Overbought Levels Identified

HP (HPQ) Technical Analysis

HP’s stock surged 4.36% in the most recent session, extending a two-day upward trend with a cumulative gain of 4.80%. The price action suggests renewed buyer momentum, warranting a detailed technical assessment to evaluate its near-term trajectory.

Candlestick Theory

Recent candlestick patterns indicate potential bullish momentum, with the price forming a series of higher highs and higher lows over the past two sessions. Key resistance levels appear to be consolidating around $27.75 (the recent high), while support is likely near $26.30 (a prior low). A bullish engulfing pattern emerged on August 22, as the candle closed significantly above the previous session’s range, signaling strong buying pressure. However, caution is warranted if the price fails to hold above $26.50, as this could trigger a retest of the $25.50–$25.00 support corridor.

Moving Average Theory

The 50-day moving average (calculated from the most recent 50 trading days) is currently above the 200-day MA, indicating a bullish intermediate-term trend. The 100-day MA sits at approximately $26.20, aligning with the key support level identified in candlestick analysis. The price’s current position above the 50-day MA ($27.10) suggests short-term strength, but a cross below the 200-day MA ($25.70) could signal a bearish reversal. The convergence of moving averages near $26.50 may act as a dynamic pivot point.

MACD & KDJ Indicators

The MACD histogram has expanded positively in recent sessions, reflecting growing momentum in the uptrend. The KDJ stochastic oscillator (14,3,3) shows the %K line crossing above 80, indicating overbought conditions. While this may suggest a potential pullback, the %D line’s upward trajectory implies sustained bullish momentum. Divergences between the MACD and price action are absent, reinforcing the reliability of the uptrend.

Bollinger Bands

Bollinger Bands have widened in recent sessions, reflecting increased volatility. The price closed near the upper band at $27.75, a classic overbought signal. If the bands contract in the near term, it may precede a period of consolidation or a reversal. The midline of the bands (20-day SMA at $26.85) remains a critical psychological level to monitor.

Volume-Price Relationship

Trading volume has surged alongside the price rally, with the August 22 session recording a volume of 6.57 million shares. This volume validates the strength of the upward move. However, a divergence between volume and price could emerge if volume declines during further gains, signaling weakening conviction among buyers.

Relative Strength Index (RSI)

The 14-day RSI has spiked above 70, confirming overbought conditions. While this suggests a potential correction, the RSI’s failure to form bearish divergences (price highs vs. RSI highs) implies the uptrend may persist. Traders should remain cautious if the RSI falls below 50, which could indicate a shift in momentum.

Fibonacci Retracement

Applying Fibonacci levels to the recent swing high ($27.75) and low ($24.30), key retracement levels at 38.2% ($26.45) and 61.8% ($25.20) coincide with existing support zones. A break below $25.20 could target the $23.90–$23.40 range, where prior consolidation occurred.

Backtest Hypothesis

The backtest strategy of selling HP when the RSI exceeds 70 has historically demonstrated favorable risk-adjusted returns. For example, during the overbought conditions in early August (RSI above 70), exiting the position would have preserved capital ahead of a subsequent pullback in mid-August. However, this approach may miss out on extended bullish moves if the RSI remains overbought for prolonged periods. Integrating this strategy with Fibonacci and moving average signals could enhance precision, as the 38.2% retracement level and 50-day MA align closely to act as a dynamic support threshold.