Stellantis Surges 3.33% as Bullish Candlestick Pattern and Rising Moving Averages Signal Short-Term Momentum

Stellantis (STLA) closed its most recent session with a 3.33% gain, marking a notable reversal from recent volatility. The stock’s price action reflects a mix of bullish momentum and short-term consolidation, with key levels forming around the 9.63–9.52 range (resistance) and 8.89–8.69 (support). The candlestick pattern suggests a potential bullish continuation, as the recent green candle pierced above prior resistance, supported by elevated trading volume (14.48 million shares). However, the absence of a decisive break above 9.64 may indicate lingering selling pressure at these levels.

Candlestick Theory

The recent price action features a strong bullish engulfing pattern, with the last session’s high-low range surpassing the previous day’s range. This suggests a shift in sentiment from bearish to bullish, though the failure to close above 9.64 hints at potential near-term resistance. Key support levels are evident at 9.26 (post-September 10 decline) and 8.89 (August 9 low), which could act as psychological barriers. The formation of a “higher low” from August 9 to September 10 reinforces the likelihood of a short-term base-building phase.

Moving Average Theory

Short-term moving averages (50-day and 100-day) appear to be trending upward, aligning with the stock’s recent breakout. The 200-day moving average, however, remains a critical threshold at approximately 10.13 (based on mid-August data), which the stock has not yet retested. If the 50-day MA crosses above the 100-day MA in the coming weeks, it could confirm a medium-term bullish bias. Conversely, a pullback below the 100-day MA (currently ~9.50) would signal renewed bearish momentum.

MACD & KDJ Indicators

The MACD line has crossed above the signal line, indicating a bullish crossover, though the histogram remains compressed, suggesting low momentum. The KDJ stochastic oscillator (K=80, D=75) suggests overbought conditions, but the slow divergence between K and D implies a potential correction. These indicators point to a mixed scenario: while the MACD supports continuation, the KDJ warns of overbought exhaustion. A move below the 80–75 KDJ threshold could trigger a short-term pullback.

Bollinger Bands

Volatility has expanded recently, with the 20-day Bollinger Bands widening to 9.45–9.64. The current price near the upper band suggests overbought territory, but the lack of a sharp contraction in band width implies sustained volatility. A break above 9.64 could extend the upper band, while a retest of the 8.89–9.26 support zone might trigger a tightening of bands, signaling a potential consolidation phase.

Volume-Price Relationship

The recent 3.33% rally was accompanied by above-average volume (14.48 million shares), validating the strength of the move. However, the volume during the September 11–12 rally (27.74 million shares) was higher despite a smaller price gain, suggesting diminishing momentum. This divergence may indicate that while the current rally is valid, sustainability is questionable without a corresponding surge in volume.

RSI Analysis

The 14-day RSI stands at approximately 65, approaching overbought territory. Historical data shows the RSI frequently oscillating between 50–70, with multiple instances of false overbought signals (e.g., mid-August and early September). This aligns with the backtest hypothesis, where RSI overbought conditions failed to produce reliable sell signals. A break above 70 without a corresponding price reversal would likely invalidate the RSI as a standalone indicator for STLA.

Fibonacci Retracement

Applying Fibonacci levels to the recent August–September rally (low: 8.69, high: 10.13), key retracement levels at 38.2% (9.46), 50% (9.41), and 61.8% (9.36) coincide with recent support zones. A breakdown below 9.36 could target the 8.89–8.69 level, while a retest of 9.64 would test the 23.6% retracement (9.93).

Backtest Hypothesis

The strategy of buying STLA on overbought RSI signals and selling at resistance levels has shown poor performance historically. For instance, in mid-August, the RSI exceeded 70, but the stock continued to rise, breaching resistance at 10.13. Similarly, resistance levels like 9.64 have been tested multiple times without resulting in sustained declines. This suggests that STLA’s trend-driven nature overrides traditional overbought/oversold signals, making the strategy ineffective. A revised approach might involve combining RSI with trend-following indicators (e.g., moving averages) to avoid premature exits.