Micron Surges 19.77% in Six Days as Technical Indicators Signal Strong Uptrend

Micron Technology (MU) has experienced a robust six-day rally, surging 19.77% in the last week, with the most recent session closing up 2.22%. This momentum suggests a strong near-term bullish bias, but technical indicators must be cross-validated to assess sustainability and potential reversal risks.

Candlestick Theory

The recent price action forms a series of higher highs and higher lows, with the 2025-10-03 candle closing near its high, reinforcing a bullish trend. Key support levels emerge at the 2025-09-25 low ($154.65) and the 2025-09-18 low ($162.6), while resistance is likely at the 2025-09-11 high ($156.26) and the 2025-09-16 high ($160.59). A potential bearish reversal could materialize if the price closes below the 2025-09-25 support, forming a "bearish engulfing" pattern. Conversely, a break above the 2025-10-02 high ($186.18) might signal continuation.

Moving Average Theory

The 50-day moving average (approximately $150–$155) is currently below the 100-day ($155–$160) and 200-day ($140–$145) averages, indicating a short-term bullish divergence. The price trading above all three MAs confirms an uptrend, but the 50-day MA lagging behind the 100-day suggests potential exhaustion. A crossover of the 50-day above the 100-day would strengthen the bullish case, while a drop below the 200-day could trigger a reevaluation of the trend.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line, supporting momentum. However, the KDJ (Stochastic) indicator shows %K and %D lines approaching overbought territory (70+), indicating a possible pullback. Divergence between MACD bullishness and KDJ overbought conditions suggests caution: while the trend remains intact, a correction may precede further gains.

Bollinger Bands

Volatility has expanded, with the price near the upper band of the Bollinger Bands (approximately $180–$190). This implies high momentum but also overbought conditions, increasing the likelihood of a mean reversion. A contraction in band width (volatility compression) could precede a breakout or breakdown, depending on volume and candlestick patterns.

Volume-Price Relationship

Volume has surged on the recent rally, particularly on the 2025-09-30 and 2025-10-01 sessions, validating the upward move. However, the 2025-10-02 volume was relatively lower despite a smaller price gain, hinting at potential weakening momentum. Sustained volume expansion on new highs would reinforce the trend, while a volume decline could signal distribution.

Relative Strength Index (RSI)

RSI has entered overbought territory (>70) in the past three sessions, suggesting short-term overextension. While this often precedes a pullback, the RSI’s failure to form bearish divergences (e.g., lower highs with higher RSI values) implies the uptrend remains intact. A drop below 50 would signal a bearish shift, but this is unlikely without a breakdown in key support levels.

Fibonacci Retracement

Drawing retracement levels between the 2025-09-03 low ($117.295) and the 2025-09-11 high ($156.26), key levels include 38.2% at $136.50 and 61.8% at $144.50. The current price near $187.83 has surpassed these levels, indicating a potential 161.8% extension target at $178.50. However, a retest of the 61.8% level could act as dynamic support if the trend continues.

Backtest Hypothesis

The backtest strategy, which involves buying on RSI oversold conditions (<30) and selling on overbought (>70), yielded a 0.00% return from 2022 to 2025, significantly underperforming the 36.98% benchmark. This failure likely stems from flawed setup parameters: both buy and sell signals were incorrectly set to overbought thresholds, creating a nonsensical strategy. Correcting this to use oversold buy and overbought sell signals could improve results, but the current data lacks transaction costs and liquidity assumptions. Integrating the above technical analysis—particularly moving average crossovers, Bollinger Band expansions, and volume validation—into the backtest framework would likely enhance its robustness by filtering low-probability trades.