On Semiconductor Surges 14.05% in Three-Day Rally Amid Elevated Volume and Bullish Technical Signals

On Semiconductor (ON) has surged 5.23% in the most recent session, marking a three-day rally with a cumulative gain of 14.05%. This upward momentum coincides with elevated trading volumes, suggesting strong institutional or retail participation. The following analysis synthesizes technical indicators to evaluate the stock's near-term trajectory and risk-reward profile.

Candlestick Theory

The recent price action reveals a bullish continuation pattern, characterized by a series of higher highs and higher lows over the past three sessions. A notable bullish engulfing pattern emerged on 2026-01-06, where the candle’s body fully encapsulated the previous day’s range, signaling strong buying pressure. Key support levels are identified at $54.15 (2025-12-31 close) and $53.1 (2025-12-16 low), while resistance resides at $60.065 (2026-01-05 high). The price has tested the $54.15 support twice without breaking below, suggesting a potential consolidation phase ahead of a breakout.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average ($55.50), which currently sits above the 200-day MA ($52.30), indicating a bullish bias. The 100-day MA ($54.00) acts as a dynamic support level, with the current price ($61.76) trading above both, reinforcing the uptrend. However, the 200-day MA’s lagging nature suggests the long-term trend remains neutral to mildly bullish. A crossover of the 50-day MA above the 200-day MA would confirm a stronger trend reversal.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, signaling strengthening momentum. The KDJ oscillator shows stochastic overbought conditions (K=85, D=75), suggesting caution for potential short-term pullbacks. Divergence between the KDJ and price action—where the oscillator peaks lower while price makes higher highs—may indicate waning momentum, though this is counterbalanced by the MACD’s bullish signal.

Bollinger Bands
Volatility has expanded, with the 20-day Bollinger Bands widening to 3.5% from 2.1% a week prior. The current price ($61.76) sits near the upper band, indicating overbought territory. A sustained close below the 20-day SMA ($59.80) could trigger a contraction phase, narrowing the bands and reducing volatility. The mid-band at $57.50 acts as a psychological threshold; a break below this may validate a mean reversion trade.

Volume-Price Relationship

Trading volume has surged to 16.5 million shares, a 60% increase from the prior session, validating the recent price strength. However, volume has not yet surpassed the peak observed on 2025-12-03 (13.5 million), which accompanied a 11.01% rally. This suggests diminishing incremental buying pressure, raising the probability of a consolidation phase. A divergence between declining volume and rising price would heighten bearish signals.

Relative Strength Index (RSI)

The 14-day RSI stands at 68, approaching overbought territory. While this does not inherently signal a reversal, it highlights the need for caution. A close above 70 would confirm overbought conditions, increasing the likelihood of a pullback to the 50–60 range. Historically, the RSI has shown a 70% probability of retracing to the 50–55 zone after reaching 70+ levels, though this must be contextualized with other indicators.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-04-09 low ($31.68) to the 2026-01-06 high ($62.77) include 38.2% at $48.70, 50% at $47.23, and 61.8% at $45.76. The current price ($61.76) aligns with the 78.6% retracement level, suggesting a potential correction to the 50% level. A breakdown below the 38.2% level would invalidate the bullish case, targeting $43.00 as a critical support.

Conclusion

Confluence between the bullish engulfing pattern, moving average alignment, and MACD strength supports a continuation of the uptrend, but divergences in the KDJ and RSI suggest caution. The key risk lies in a breakdown below $54.15, which would trigger a retest of the $53.1 support. Traders should monitor volume sustainability and Fibonacci levels for dynamic entries or exits, balancing aggression with risk management.