Regeneron Surges 7.00% on Bullish Candlestick Pattern and Moving Average Crossover

Candlestick Theory

Regeneron (REGN) has exhibited a three-day bullish candlestick pattern, with a 7.00% cumulative gain, indicating short-term momentum. Recent price action shows higher highs and higher lows, suggesting an uptrend. Key support levels can be identified at recent intraday lows (e.g., $555.51 on 2025-09-25), while resistance aligns with recent peaks (e.g., $615.39 on 2025-10-01). A bullish engulfing pattern is visible around 2025-09-18, where a large white candle followed a smaller black candle, signaling potential continuation of the uptrend. However, bearish divergence emerges in late August, where prices made higher highs but candle bodies narrowed, hinting at waning momentum before a pullback.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average (approximately $590–$600), which remains above the 200-day MA ($570–$580), indicating a bullish bias. The 100-day MA ($580–$590) acts as dynamic support, currently holding near recent price levels. Crossovers between these MAs suggest sustained upward pressure, though the 50-day MA’s flattening slope in early October implies caution. A breakdown below the 50-day MA could trigger a retest of the 200-day MA as a critical trend filter.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence since late September, with increasing bullish momentum as the stock broke out of a consolidation phase. The KDJ (Stochastic) indicator, however, signals overbought conditions (e.g., %K above 80 on 2025-10-01), suggesting potential near-term exhaustion. While the MACD line remains above its signal line, a flattening MACD histogram in early October raises caution about short-term overextension. The KDJ’s bearish crossover in mid-September preceded a pullback, highlighting its efficacy in identifying reversals during downtrends but less so in strong uptrends.

Bollinger Bands

Volatility has expanded recently, with prices near the upper Bollinger Band ($605–$615), consistent with overbought territory. Band contraction occurred in late August, signaling a period of low volatility before the breakout. The current position near the upper band suggests caution, as breakouts often precede corrections. However, the stock’s ability to hold above the middle band ($580–$600) reinforces the uptrend’s integrity.

Volume-Price Relationship

Trading volume has surged during the recent rally, particularly on 2025-10-01 ($1.25B) and 2025-09-18 ($756M), validating the price increase. However, volume declined on the 2025-10-02 up-move ($659M), raising questions about sustainability. A healthy volume profile typically sees higher volume on up days than down days, which is observed here. Conversely, the low-volume consolidation phase in late August ($339M–$446M) failed to produce a breakout, indicating weak conviction before the recent rally.

Relative Strength Index (RSI)

The 14-period RSI has oscillated between 50–70 since late September, with a peak above 70 on 2025-10-01, signaling overbought conditions. While this suggests a potential pullback, the stock’s strong uptrend may allow RSI to remain elevated longer than typical. A drop below 50 would confirm weakening momentum, but the current RSI trajectory suggests the trend remains intact. Caution is warranted if RSI fails to retrace below 60 after an overbought reading, as this could indicate a false signal in a trending market.

Fibonacci Retracement

Key Fibonacci levels from the 2025-05-30 low ($490) to the 2025-08-04 high ($583) provide critical support/resistance. The 38.2% retracement level (~$540) has held as support during pullbacks, while the 61.8% level (~$565) coincides with recent consolidation. A breakdown below the 50% level ($537) would target the 78.6% retracement (~$490), aligning with the May low. Conversely, a breakout above the 2025-10-01 high ($615) would invalidate the Fibonacci structure and extend the uptrend.

Backtest Hypothesis

The proposed RSI-based strategy (buying below 30, selling above 70) underperformed the NASDAQ Composite (36.98% return) with zero strategy return from 2022–2025. This failure stems from rigid thresholds in a trending market: RSI often remains overbought during strong uptrends, leading to missed entries. Adjustments could include dynamic thresholds (e.g., 20/80 in strong trends) or combining RSI with trend-following indicators like moving averages. For example, using RSI to identify pullbacks in an uptrend (confirmed by a bullish MA crossover) could improve efficacy. The backtest highlights the need for confluence—RSI alone is insufficient in trending environments.