Tencent Music Slides 3.5% As Bearish Technicals Signal Further Downside Risk

Candlestick Theory
Recent Tencent Music (TME) price action reveals key technical patterns. The stock closed at $18.20 (-3.50%) on June 17, forming a bearish engulfing candle after rejection near the $18.75 resistance—a level tested twice in June and aligning with May’s double-top at $19.40. This resistance zone ($18.75–$19.40) now appears critical. Support emerges near $16.80–$17.00, validated by the May 14 breakout candle and consolidation in late May. A close below $18.00 could signal further downside toward $17.50, where February’s peak and March’s rally base converge.
Moving Average Theory
The 50-day moving average (currently near $16.80) provided dynamic support during May’s surge but is now testing as resistance. More significantly, the 200-day MA ($14.50) slopes upward, confirming the longer-term bull trend from Q1 2025’s $10.18 low. However, the death cross persists with the 50-day below the 100-day ($17.20), reflecting medium-term bearish pressure. Current price trades below all key MAs (50/100/200), suggesting near-term distribution. A reversal above the 50-day MA is needed to reinvigorate bullish momentum.
MACD & KDJ Indicators
MACD (12,26,9) shows bearish divergence: despite June’s $19.40 peak exceeding May’s high, the histogram printed lower highs, foreshadowing the current pullback. The signal line crossed below the MACD line on June 14, accelerating downside momentum. Meanwhile, the KDJ oscillator’s %K (14-period) dipped below %D at 65 on June 17, exiting overbought territory (>80 on June 10) but lacking oversold conviction. These jointly suggest downward momentum could persist near-term.
Bollinger Bands
Volatility expanded sharply during May’s 40% rally, with price piercing the upper band repeatedly. Recent sessions show bands contracting (20-day Band Width narrowing 15% since June 10), indicating reduced volatility and potential coiling for a directional move. Price currently tests the lower band ($18.00), a break of which may trigger accelerated selling. Historical band squeezes (e.g., early April) preceded significant trends, heightening vigilance here.
Volume-Price Relationship
Volume analysis reveals critical distribution signals. The June 10 session recorded 11M shares traded as price reversed sharply from $19.40, confirming resistance. Subsequent declines (June 13 and 17) saw above-average volume, adding credence to bearish momentum. Contrastingly, the May 14 breakout saw a 361M USD volume spike—the highest in 6 months—validating that rally. Current lack of accumulation volume suggests downward moves face limited absorption.
Relative Strength Index (RSI)
The 14-day RSI has retreated from overbought territory (peaking at 78 on June 10) to 44 as of June 17. While not yet oversold, this neutral reading allows room for further downside. Notably, RSI failed to breach 70 during June’s lower high versus May, reinforcing bearish divergence. A drop below 40 could signal accelerating selling pressure, though traders should await confirmation—RSI may linger in the 40–60 range during consolidation.
Fibonacci Retracement
Applying Fib levels to the March–June upswing ($10.18–$19.40):
- 23.6% retracement at $17.40 (tested on June 13)
- 38.2% level aligns with $16.00, converging with the 200-day MA and March swing high
The 50% retracement ($14.79) marks stronger support, echoing the April consolidation zone. Current price action eyes the 38.2% level as a potential downside target should $17.50 break.
Confluence and Divergence
Confluence reinforces the $18.75–$19.40 resistance (candlestick highs, volume distribution) and $16.80–$17.00 support (50-MA, VWAP anchor). Divergence remains prominent: MACD and RSI showed bearish signals while price tested June highs, and now Bollinger Band contraction hints at impending volatility. Given multiple indicators aligning toward near-term caution, Tencent Music appears vulnerable to further downside unless it reclaims the 50-day MA ($16.80) with accompanying volume. Immediate resistance holds at $18.00–$18.20 (June 17 close/lower Bollinger Band), while breakdown confirmation below $17.50 opens the path to $16.00.