Nextera Energy's Bearish Candlestick and Bearish Moving Averages Signal 0.82% Drop as Key Support Levels Emerge

Candlestick Theory

Nextera Energy (NEE) has formed a bearish candlestick pattern over the past two sessions, with a 0.82% decline and a closing price of $83.35 below the 20-day moving average. Key support levels emerge at $80.06 (2025-10-03 low) and $75.49 (2025-09-30 low), where prior buying interest has stabilized the price. Resistance is clustered near $84.83 (2025-10-07 high) and $85.00, a psychological round number. A bearish engulfing pattern on 2025-10-10 suggests continued pressure, though a potential bullish reversal could occur if the price rebounds above $83.71 (2025-10-09 high) with increasing volume.

Moving Average Theory

Short-term momentum remains bearish, with the 50-day moving average ($79.47) significantly below the 200-day ($77.62), indicating a downtrend. The 100-day MA ($78.23) aligns with the 200-day, reinforcing the bearish bias. The price is currently trading above the 50-day MA, suggesting a temporary consolidation phase. A break below the 50-day MA would confirm a deeper correction, while a retest of the 100-day MA may act as a dynamic resistance level. The 200-day MA provides a critical long-term support threshold at ~$77.62.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line (-0.53) crossing below the signal line (-0.31), signaling bearish momentum. The KDJ oscillator shows a stochastic death cross, with %K (25.3) and %D (30.1) in oversold territory but diverging from price action, suggesting potential exhaustion in the downtrend. The RSI (28.9) confirms oversold conditions, but a bullish divergence in the KDJ may indicate a short-term rebound. However, confluence with the bearish MACD suggests caution until the RSI crosses above 40 with rising volume.

Bollinger Bands

Volatility has contracted, with the price trading near the lower Bollinger Band ($83.195), a classic setup for a potential breakout or breakdown. The 20-day volatility (ATR) of $1.45 suggests a 2% move could trigger a breakout. A sustained close above the mid-band ($83.97) would signal a shift in sentiment, while a break below $82.87 (lower band) could extend the decline. The bands’ narrowing indicates a period of consolidation, with a high probability of a directional move in the coming sessions.

Volume-Price Relationship

Trading volume has declined by 15% over the past two days, weakening the conviction of the downtrend. The recent session’s volume (10.29M shares) is below the 20-day average (12.15M), suggesting waning bearish momentum. However, a surge in volume on a rebound above $83.71 would validate the short-term reversal. Conversely, a spike in volume below $80.06 would confirm a breakdown. The volume profile lacks a clear climax, implying the decline may not yet be exhausted.

Relative Strength Index (RSI)

The RSI (28.9) is in oversold territory, but historical data shows it has lingered below 30 for extended periods during prior corrections (e.g., 2025-09-08 to 2025-09-10). A stochastic RSI reading of 24.5 reinforces the oversold condition, but a failure to cross above 30 within three sessions may indicate a deeper correction. A bullish reversal is likely if the RSI closes above 40 on increasing volume, while a breakdown below 20 would signal further weakness.

Fibonacci Retracement

Key Fibonacci levels align with critical support/resistance areas:

- 23.6% retracement ($83.85) coincides with the 20-day MA.

- 38.2% retracement ($84.10) overlaps with the 50-day MA.

- 61.8% retracement ($83.15) aligns with the lower Bollinger Band.

A breakdown below the 61.8% level would target the 76.4% retracement at $81.40, a prior swing low.

Backtest Hypothesis

A backtest of a strategy buying NEE when the RSI falls below 30 and holding for five days from 2022 to 2025-10-10 yields a -16.80% return, significantly underperforming the S&P 500’s 42.82% gain. The strategy’s negative Sharpe Ratio (-0.33) and 14.59% volatility highlight poor risk-adjusted returns. While the RSI oversold condition theoretically signals a rebound, historical data shows NEE often remains in oversold territory during corrections, particularly in 2023-2024. The lack of volume confirmation on recent bounces (e.g., 2025-09-03) further undermines the strategy’s viability. Integrating Fibonacci retracement levels with RSI thresholds could improve efficacy, but the confluence with bearish moving averages and MACD suggests short-term caution.