Sea's stock surges 3.80% on bullish continuation pattern and MACD golden cross

Candlestick Theory

Sea’s recent price action exhibits a bullish continuation pattern, with a two-day upward trend and a 3.80% gain. The most recent session closed at 185.53, near the high of 185.68, forming a long-bodied green candle that suggests strong buying pressure. Key support levels are identified at 177.27 (August 18 close) and 174.01 (August 14 close), while resistance is clustered around 185.68 (August 22 high). A break above 185.68 could trigger further gains, while a pullback below 177.27 may indicate short-term weakness.

Moving Average Theory

The 50-day moving average (calculated from historical data) currently sits above the 100-day and 200-day averages, suggesting a bullish medium-term trend. Short-term momentum aligns with the long-term direction, as the 50-day line remains above the 100-day line. However, the 200-day average may act as a critical support zone if the price retraces. The confluence of moving averages above the current price reinforces the potential for sustained upward movement.

MACD & KDJ Indicators

The MACD histogram shows a narrowing bearish divergence, with the line crossing above the signal line on August 22, signaling a potential golden cross and short-term bullish momentum. The KDJ stochastic oscillator, however, indicates overbought conditions, with the %K line hovering near 80 and %D approaching 70. This divergence suggests caution, as overbought levels may precede a short-term correction. Traders should monitor for a bearish crossover in KDJ to confirm potential exhaustion in the upward trend.

Bollinger Bands

Volatility has expanded recently, with the price touching the upper Bollinger Band on August 22. The 20-day standard deviation is elevated, reflecting increased buying activity. While the price remains within the bands, a breakout above the upper band may indicate a continuation of the trend, whereas a reversion toward the middle band could signal consolidation. The bands’ contraction in early August (e.g., August 11–12) preceded the sharp rally, suggesting prior low volatility as a potential precursor to a breakout.

Volume-Price Relationship

Trading volume has surged on recent up days, with the August 22 session recording 4.86 million shares traded, the highest in the past two weeks. This volume validates the price strength, as higher participation supports the sustainability of the upward move. Conversely, declining volume during pullbacks (e.g., August 18–20) raises questions about the depth of bearish sentiment. The positive correlation between rising prices and expanding volume strengthens the case for a continuation of the trend.

Relative Strength Index (RSI)

The 14-day RSI has entered overbought territory (above 70), reflecting the rapid 3.80% gain over two days. While this does not immediately signal a reversal, it highlights the risk of a near-term correction. Historical data shows RSI frequently returning to the 50–60 range after overbought levels, suggesting a potential pullback to test key support zones. Traders should watch for a bearish divergence between price and RSI to confirm weakening momentum.

Fibonacci Retracement

Key Fibonacci levels derived from the recent low (145.89 on August 11) and high (185.68 on August 22) suggest critical support at 164.38 (38.2% retracement) and 154.38 (50% retracement). The price’s current position near 185.68 implies that a retracement to these levels could offer buying opportunities. Conversely, a break above 185.68 may target the 23.6% retracement at 174.01, which has historically acted as a dynamic support.

Backtest Hypothesis

The MACD golden cross strategy, tested from 2022 to the present, demonstrates moderate effectiveness in Sea’s context. A 5-day holding period aligns with the recent bullish momentum, as the golden cross on August 22 could generate a 3–5% gain if the price holds above 177.27. However, the strategy’s performance during market corrections (e.g., mid-August pullbacks) highlights its susceptibility to volatility. For Sea, this approach may yield positive returns in trending environments but requires caution during overbought conditions, as the RSI and KDJ suggest potential exhaustion.