Tencent Music Drops 4.16% As Bearish Signals Dominate Technical Outlook

Technical Analysis of Tencent Music (TME)
Tencent Music (TME) concluded the latest session at $21.43, declining 4.16% on elevated volume. This analysis leverages historical price data to assess key technical dynamics.
Candlestick Theory
Recent price action reveals a distinct bearish reversal pattern. The session dated 2025-07-17 formed a strong green candle closing at $22.36. However, this was immediately engulfed on 2025-07-18 by a larger red candle closing near its low at $21.43. This Bearish Engulfing pattern, occurring near the local high of $22.50 (2025-07-17) and the significant resistance zone established in late March ($22.50-$23), suggests exhaustion of the preceding rally. Immediate support is identified near $20.67 (2025-07-14 close) and $19.79 (2025-07-11 close). Major resistance remains solidified at $22.50-$22.60.
Moving Average Theory
The long-term downtrend persists, with the price trading decisively below both the key 100-day and 200-day moving averages throughout the provided data. A significant bearish development was the recent bearish crossover of the 50-day MA below the 100-day MA. This crossover signals deteriorating intermediate momentum. The close below $21.43 is now testing the 50-day MA as potential resistance, reinforcing the prevailing bearish bias.
MACD & KDJ Indicators
The MACD indicator remains entrenched in negative territory, with the MACD line firmly below the signal line and both trending downward. This configuration underscores sustained bearish momentum. Meanwhile, the KDJ oscillator exhibits no positive divergence; the K and D lines are both descending below the 50 midpoint and show no signs of turning upward. This KDJ structure aligns with the MACD in suggesting the current downtrend has ongoing momentum capacity before reaching oversold territory.
Bollinger Bands
Volatility is increasing as evidenced by noticeable expansion of the Bollinger Bands over the past week, particularly on the downside. The latest closing price of $21.43 positions the stock near the lower Bollinger Band. While such positioning can sometimes precede a minor technical rebound due to oversold readings, the concurrent expansion of the bands typically favors continuation of the established trend direction – in this case, downward.
Volume-Price Relationship
The latest down day (2025-07-18) was accompanied by significantly elevated volume (9.7 million shares), lending credence to the bearish candlestick signal and suggesting strong selling pressure. Notably, during the prior rally phase leading to the $22.50 high, substantial volume was also present on up days (e.g., 7.4 million on 2025-07-14). This volume profile generally validated the upward moves. The high-volume sell-off indicates the current downward move may possess sustainability.
Relative Strength Index (RSI)
The RSI calculation (using the standard 14-period lookback) yields a current reading of approximately 37.42. This places the RSI below the neutral 50 level but above the oversold threshold of 30. While indicative of weakening momentum, it does not yet signal a deeply oversold condition that might typically foreshadow an imminent strong reversal. The RSI warning is currently suggestive of bearish control, though not exhaustion.
Fibonacci Retracement
Applying Fibonacci retracement levels to the significant upswing from the $10.18 low (2024-09-23) to the $22.50 high (2025-07-17) reveals key technical levels. The 38.2% retracement level resides near $18.90. A breach below the immediate $20.67-$19.79 support area would open the door towards testing this Fibonacci level. More substantial historical support aligns with the 50% ($17.82) and 61.8% ($16.74) retracements.
Confluence & Divergence
Confluence: The resistance confluence around $22.50 is compelling, combining the recent peak, the bearish engulfing candle formation, the psychologically significant round number resistance, proximity to the declining 200-day MA, and a major Fibonacci extension level derived from the late March advance (not explicitly calculated here). Similarly, support near $20.67-$20.00 combines a prior swing high, recent consolidation zone lows, and psychological support. A failure below $19.79 targets the $18.90 Fibonacci level, reinforced by volume clusters seen around $19.00 previously.
Divergence: No significant positive divergences are detected across the primary momentum oscillators (MACD, KDJ, RSI). All remain consistently bearish and confirm the downward price trajectory. The volume pattern lacks divergence, as high volume accompanies the sell-off.
Conclusion
The technical posture for Tencent Music is predominantly bearish in the near term. The confluence of the Bearish Engulfing candle at resistance, the high-volume sell-off, the 50/100 MA bearish crossover, and bearish MACD/KDJ configurations suggest downward pressure is currently dominant. Key support is critical at the $20.67-$20.00 zone; a decisive break below $19.79 would target the $18.90 Fibonacci support. Any recovery attempt would face formidable resistance starting at $21.50-$22.00 and, more significantly, around $22.50. Probabilities favor sellers unless RSI moves towards oversold territory while price stabilizes and forms bullish reversal signals, particularly if accompanied by rising volume.