Nike Shares Drop 5.60% in Two-Day Slide Amid Bearish Technical Signals and Death Cross Crossover

NIKE (NKE) shares declined 4.17% in the most recent session, marking a two-day losing streak with a cumulative drop of 5.60%. This sharp correction follows a volatile period characterized by mixed momentum signals and shifting volatility patterns, warranting a multi-indicator analysis to assess potential turning points and trend sustainability.

Candlestick Theory

Recent price action forms a bearish engulfing pattern on October 10, where the lower shadow of the candlestick confirms key support at $64.88. This level aligns with a prior intraday low from July 30 and appears to contain the selloff, with a 5.60% retracement from the September 30 high of $74.20. A breakdown below $64.88 would target the next Fibonacci level at $61.22, while a rebound above $68.06 (October 9 high) could retest the 50-day moving average at $70.30. The 2025-07-02 gap between $73 and $76.84 remains a critical resistance cluster, with potential for a bullish reversal if the price closes above $71.93 (October 3 high).

Moving Average Theory

The 50-day MA ($70.30) and 200-day MA ($73.48) form a bearish crossover, with the 100-day MA ($71.15) closely aligned to the 50-day. This "death cross" configuration suggests medium-term weakness, though the 20-day MA ($68.00) crossing below the 50-day MA reinforces the short-term downtrend. Price action has remained below the 200-day MA since October 3, indicating a potential continuation of the bearish bias. A sustained break above $74.20 (September 30 high) would challenge the 200-day MA as a dynamic resistance level.

MACD & KDJ Indicators

The MACD histogram has turned negative since October 7, with the line crossing below the signal line to confirm bearish momentum. The KDJ stochastic oscillator shows oversold conditions (K=28, D=33), though the 12-day RSI at 29 suggests a potential short-term bounce. Divergence between the KDJ and price action is notable: while the oscillator bottomed on October 8, prices continued to fall, hinting at unresolved bearish pressure. A bullish crossover in the KDJ above 50 would require a rally to $71.93 to validate a reversal.

Bollinger Bands

Volatility expanded sharply on October 10, with the bands widening to a 20-day standard deviation of $5.80. Prices currently trade near the lower band at $64.88, consistent with oversold conditions. The band contraction observed between September 30 and October 6 (narrowing to $3.20) failed to produce a breakout, suggesting range-bound consolidation. A move above the middle band ($69.50) would signal a potential reversal, though the upper band at $74.12 remains a critical resistance level.

Volume-Price Relationship

Trading volume spiked to 18.8 million shares on October 10, confirming the bearish breakdown from $68.06. The volume-to-price correlation strengthens the validity of this move, as the decline occurred on elevated volume. However, the lack of follow-through selling on October 9 (13.4 million shares) indicates potential exhaustion in the short-term bearish momentum. A volume spike above 25 million shares on a rebound would be necessary to confirm a reversal.

Relative Strength Index (RSI)

The 14-day RSI stands at 29, signaling oversold conditions. This aligns with the Fibonacci 38.2% retracement level at $65.22, which has held as a support since October 3. Historical data shows the RSI has bottomed below 30 four times in the last 90 days, with subsequent rallies averaging 4.2% in the following 5 days. However, the RSI divergence (price lows below RSI lows) on October 8 suggests bearish continuation, with a potential target of 23 before a rebound.

Fibonacci Retracement

Key retracement levels from the July 30 high of $74.78 to the October 10 low of $64.88 include:

- 23.6%: $71.93 (October 3 high)

- 38.2%: $69.73 (September 30 close)

- 50%: $69.83 (September 30 midpoint)

- 61.8%: $67.88 (October 9 low)

- 78.6%: $65.22 (October 10 close)

The 61.8% level at $67.88 appears to have contained the selloff on October 9, suggesting potential support for a countertrend rally. A break below $64.88 would target the 78.6% level at $65.22.

Backtest Hypothesis

The backtest of the RSI overbought strategy from 2022 to 2025 shows a 60.42% win rate over 3 days but a declining 37.50% win rate over 10 days, indicating short-term effectiveness but limited holding power. The maximum 30-day return of 0.41% suggests that while the strategy can capture quick profits, it lacks sustainability in trending markets. This aligns with the current analysis, where RSI oversold conditions may present entry opportunities, but the bearish trend indicators (MACD, moving averages) suggest caution in holding positions beyond 5-7 days. A modified approach combining RSI oversold signals with Fibonacci support levels could improve risk-reward ratios, particularly if the price tests the $64.88 level on declining volume.