Shopify Drops 4.31% As Bearish Signals Emerge Near Key Resistance

Shopify (SHOP) declined 4.31% in the latest session, closing at $109.21 after trading between $108.87 and $113.57 on volume of 8.64 million shares. This movement occurs within a broader context of volatile price action over the past three months, which will be examined through multiple technical lenses below.
Candlestick Theory
The recent candlestick sequence reveals critical patterns. The June 11 session formed a bullish marubozu (open near low, close near high) at $114.13, followed by a 4.31% bearish engulfing pattern on June 12. This reversal signal near the $113.50-$114 resistance zone suggests exhaustion after the 13.7% rally from May 12 lows. The $106-$107 area now acts as immediate support, marked by the May 19-20 consolidation and June 6 swing low. Resistance remains firm at $114-$115, corresponding to the March 31 high and June 11 peak.
Moving Average Theory
Using adjusted periods due to dataset constraints, the 20-day EMA ($104.80) crossed above the 50-day EMA ($98.20) in mid-May, confirming a medium-term uptrend. However, the latest close at $109.21 remains below the 10-day EMA ($110.50), indicating near-term weakness. The bullish alignment of shorter EMAs above longer ones persists, but sustained trading below the 10-day EMA could foreshadow trend deterioration. Confluence exists at $106, where the 20-day EMA aligns with horizontal support.
MACD & KDJ Indicators
The MACD histogram turned negative on June 12 after a bearish crossover, with the signal line (0.85) diverging above the MACD line (0.78). This momentum shift follows overextended conditions from the June 6 surge. Meanwhile, the KDJ’s %K (32) crossed below %D (41) from overbought territory (>80 on June 11). Both oscillators concur on waning bullish momentum, though neither yet signals oversold conditions. Divergence emerged as price reached higher highs on June 11 while KDJ registered a lower high.
Bollinger Bands
Bollinger Bands (20-day, 2SD) expanded sharply during the May 12 breakout (+13.7%), reflecting elevated volatility. Recent contraction (bandwidth narrowing 15% since May 30) preceded the latest decline. Price now tests the middle band ($108.80), with a sustained break potentially targeting the lower band at $101.50. The squeeze-then-reversal pattern suggests directional conviction is reestablishing after consolidation.
Volume-Price Relationship
Volume spikes validated key movements: 30.7M shares on May 12 (breakout), 98.1M on May 16 (distribution), and 14.1M on June 11 (reversal). The latest decline occurred on below-average volume (8.64M vs 14.1M prior day), suggesting limited conviction. However, the June 6 rally saw only 8.74M shares versus the June 5 dip’s 11.1M – a bearish divergence indicating weak buying participation during advances.
Relative Strength Index (RSI)
The 14-day RSI (47.3) exited overbought territory (>70 on June 11) and now trends toward neutrality. While not yet oversold, the swift decline from 72 to 47 indicates accelerating selling pressure. Historical reactions near 50 support (April 23, May 9) suggest this level may provide interim stability. However, RSI’s failure to exceed its May peak despite higher prices in June signals bearish divergence.
Fibonacci Retracement
Applying Fib levels to the March 31 ($95.48) to June 11 ($117.36) rally shows critical retracement zones. The 38.2% level at $109.00 provided temporary support during the June 12 sell-off. Sustained breach targets the 50% retracement at $106.40 – aligning with the 20-day EMA and June 6 low. The 61.8% level ($103.90) converges with the May 29 swing low and 200% Bollinger Band extension. This layered support at $106.40-$103.90 represents a high-probability bounce zone should declines continue.
Confluence and Divergence Summary
Multiple indicators converge to highlight $106-$107 as critical support, blending Fibonacci (50%), moving average (20-day EMA), and horizontal price levels. Bearish confluence includes MACD/KDJ crossovers and RSI divergence, suggesting near-term downside risks. However, Bollinger Band contraction indicates a volatility reset, which may precede directional resolution. The volume-price divergence during rallies warrants caution about sustainability, though absence of distribution patterns prevents a structural bearish call. Probabilistically, the setup favors range-bound action between $106-$114 until volatility expands.