Microchip Technology Plunges 8.28% Amid Technical Breakdown Signals

Microchip Technology (MCHP) has experienced significant selling pressure, declining 8.28% on October 10, 2025, to close at $60.41, marking a two-day cumulative drop of 9.73%. This analysis employs a multi-indicator framework to assess the technical posture.
Candlestick Theory
Recent sessions reveal a pronounced bearish pattern. The October 10 candle is a long red body with minimal wicks, closing near the session low ($60.20), indicating sustained selling momentum. This follows two preceding red candles, forming a bearish continuation sequence. Key support is established at $60.20 (intraday low), with resistance near $65.50–$66.00, aligning with the October 8–9 consolidation zone. A sustained break below $60.20 would expose the August 11 low of $60.84.
Moving Average Theory
The 50-day SMA ($65.12), 100-day SMA ($64.80), and 200-day SMA ($62.50) illustrate deteriorating momentum. Price has decisively breached all three averages, with the 50-day crossing below the 100-day last week – a bearish "death cross." The 200-day SMA, now sloping downward, reinforces the long-term bearish bias. Current trading below all key averages signals entrenched weakness.
MACD & KDJ Indicators
MACD (12,26,9) shows the signal line diverging below the MACD line in negative territory, accelerating bearish momentum. KDJ (9,3,3) entered oversold territory on October 10, with K=18 and D=22. However, J=-10 highlights extreme downside momentum. While oversold KDJ readings sometimes precede bounces, confirmation requires J-line reversal and MACD histogram improvement. No bullish divergence is yet evident.
Bollinger Bands
Bollinger Bands (20-day, 2σ) expanded sharply during the sell-off, reflecting elevated volatility. Price closed below the lower band ($63.80) on October 10 – typically an oversold signal. However, the lack of immediate mean reversion suggests persistent downward pressure. Watch for band contraction and price stabilization within bands to signal exhaustion.
Volume-Price Relationship
Volume surged to 12.5 million shares on October 10, significantly above the 30-day average of 7.8 million. This high-volume breakdown validates the bearish momentum, indicating institutional participation in the sell-off. Volume has exceeded average during down days over the past week, confirming distribution. Reversal requires low-volume consolidation or high-volume bullish reversal candles.
Relative Strength Index (RSI)
The 14-day RSI collapsed to 28, entering oversold territory. While historically this precedes short-term rebounds, oversold conditions can persist during strong downtrends (e.g., RSI remained below 30 for five sessions in May 2025). Divergence relative to early September’s oversold bounce is absent, limiting reversal confidence. A rebound above 35 would signal momentum improvement.
Fibonacci Retracement
Applying Fibonacci to the recent uptrend from the August 11 low ($60.84) to the October 3 high ($69.00): the 100% retracement level was breached intraday ($60.20), closing just above it. The 123.6% extension sits at $59.30. More significantly, the 61.8% retracement of the March–July 2025 rally (high: $79.05, low: $35.10) aligns at $64.20, which now acts as resistance after being broken on October 9.
Confluence & Divergence
Confluence appears at $64.00–$65.00, where the 61.8% major Fibonacci, prior support (October 7–9), and cluster of SMAs converge, strengthening resistance. Divergence exists between RSI/KDJ oversold signals and the absence of bullish reversal patterns or volume confirmation. The MACD and Bollinger Band expansion align with persistent downside momentum. Probabilities favor further downside toward $59.30, though oversold oscillators suggest near-term consolidation risk. A decisive recovery above $65.50 is needed to invalidate the bearish structure.