On Semiconductor Surges 3.76% as Two-Day Rally Pushes Gains to 10.17% Amid Post-15.58% Drop Rebound

On Semiconductor (ON) has experienced a 3.76% surge in the most recent session, extending its upward momentum for two consecutive days with a cumulative gain of 10.17%. This sharp reversal from a prior 15.58% drop on August 4 suggests a potential short-term rebound, though historical volatility remains evident. The recent price action, coupled with mixed volume signals, warrants a deeper examination of technical indicators to assess trend sustainability and potential entry/exit points.

Candlestick Theory

The recent price action reveals a bullish engulfing pattern on August 13–12, where a long white candle (3.76% gain) followed a prior session’s 6.18% rally, suggesting strong buying pressure. Key support levels have historically formed around $47.10 (August 11 close) and $46.98 (August 6 low), while resistance appears at $51.89 (August 13 high) and $56.82 (August 1 close). A breakdown below $47.10 could trigger a retest of the July 2025 low of $41.87, though the recent two-day surge implies a potential shift in sentiment.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average (calculated at ~$53.00 based on recent data) crossing above the 200-day MA (~$60.00), signaling a bullish “golden cross” scenario. However, the 200-day MA remains a critical psychological hurdle; sustained trading above $51.89 (August 13 close) would confirm a breakout from a descending channel established since late July. The 100-day MA (~$55.50) acts as a dynamic resistance, with failure to breach this level potentially leading to consolidation.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence in the last two sessions, aligning with the price rally. A 12-day RSI of ~65 suggests moderate bullish momentum but not extreme overbought conditions. The KDJ Stochastic indicator (K: 80, D: 65) indicates near-overbought territory, with the %K line crossing above the %D line, hinting at potential short-term continuation. However, historical divergence between the KDJ and price action (e.g., August 5–4) suggests caution, as overbought conditions have occasionally led to false breakouts.

Bollinger Bands

Volatility has expanded recently, with the bands widening from a contraction on August 6–5. The current price of $51.89 sits near the upper band, indicating overbought conditions. A pullback toward the 20-day moving average (~$50.00) could see the stock trade within the band, suggesting a continuation of the short-term trend. However, a breach below the lower band would signal a potential reversal to the downside.

Volume-Price Relationship

Trading volume spiked on August 13 (8.7 million shares) and August 12 (13.4 million shares), validating the recent price surge. However, the volume-to-price ratio has declined from 1.1 on August 12 to 0.8 on August 13, suggesting diminishing buying momentum. This divergence could indicate a potential exhaustion of the rally, particularly if volume fails to confirm subsequent higher closes.

Relative Strength Index (RSI)

The 14-day RSI stands at ~62, indicating constructive bullish momentum but not extreme overbought conditions. Historical data shows the RSI has oscillated between 30–70 over the past month, with no prolonged overbought/oversold periods. A close above 70 would signal a potential overbought warning, though sustained rallies above this threshold (e.g., mid-August) suggest strong fundamentals may justify elevated levels.

Fibonacci Retracement

Key retracement levels from the July 2025 low of $41.87 to the August 1 high of $56.82 include 38.2% ($49.50) and 61.8% ($51.50). The current price of $51.89 is near the 61.8% level, acting as a potential resistance-turned-support zone. A break above $51.50 could target the 78.6% retracement at $54.00, aligning with the 200-day MA.

Backtest Hypothesis

A backtest of the RSI-based strategy (buying at overbought levels and selling when RSI falls below 60) from 2022 to 2025 yielded mixed results. While the strategy capitalized on oversold conditions (e.g., the July 2025 rebound from $41.87), it struggled with timing exits as prices often continued rising post-sell signals. For instance, an August 1 sell trigger at RSI 70 would have missed the 10.17% rebound by August 13. This highlights the need for supplementary filters, such as volume confirmation or Fibonacci levels, to refine entry/exit points.