Warner Bros Discovery Slumps 6.22% After September Rally As Technicals Signal Exhaustion

Warner Bros. Discovery (WBD) declined 6.22% in the latest session, closing at $18.25 after a volatile trading period characterized by significant price surges earlier in September. This analysis employs multiple technical frameworks to evaluate the stock's trajectory.
Candlestick Theory
Recent candlestick patterns reveal critical price dynamics. The three large bullish candles on 2025-09-11 (+28.95%), 2025-09-12 (+16.70%), and 2025-09-15 (+3.13%) suggest explosive buying momentum. However, the subsequent bearish engulfing pattern on 2025-09-16 (-6.22%) signals exhaustion near the $19.60 resistance, coinciding with the yearly high. Key support emerges at $17.61 (2025-09-16 low) and $16.17 (2025-09-11 close), while resistance is firm at $19.60.
Moving Average Theory
The moving averages confirm a bullish trend reversal. The 50-day MA (~$13.50) crossed above the 100-day MA (~$12.00) in August, followed by a golden cross above the 200-day MA (~$10.50) in early September. Despite the recent pullback, the price maintains a substantial premium (35%) above the 200-day MA. The consistent bullish alignment (50>100>200) signals enduring upward momentum, though proximity to the 50-day MA could invite short-term testing.
MACD & KDJ Indicators
MACD shows waning bullish momentum. The MACD line peaked near the September rally but is now exhibiting a bearish convergence as the signal line flattens. Concurrently, KDJ registers overbought conditions (K and D exceeding 80) during the September surge, with the %K line now crossing below %D—a bearish near-term signal. This divergence between fading MACD momentum and KDJ’s overbought reversal suggests consolidation is likely.
Bollinger Bands
Bollinger Bands highlight extreme volatility. The September rally propelled prices above the upper band, indicating speculative overheating. The subsequent contraction on 2025-09-16—with price closing near the lower band ($17.61)—implies normalization of volatility and potential retest of the middle band ($16.80, 20-day SMA). Band expansion during the rally and current contraction reinforce the likelihood of consolidation.
Volume-Price Relationship
Volume dynamics validate key price moves. The 298M and 286M shares traded during the 28.95% and 16.70% rallies (2025-09-11 and 12) confirm strong breakout conviction. Conversely, the 85M volume during the 6.22% decline (2025-09-16) signals meaningful selling pressure. Declining volume during pullbacks (e.g., August consolidation) historically supported price recovery, making current volume patterns pivotal for confirming trend sustainability.
Relative Strength Index (RSI)
The 14-day RSI reached 85 during the September peak, deep into overbought territory (>70). It has since retreated to 58, reflecting moderation but remaining above the neutral 50 threshold. While the overbought RSI warned of a pullback, the current reading lacks oversold conviction. RSI’s failure to breach 50 on the latest down day may suggest underlying strength, though its neutrality warrants caution.
Fibonacci Retracement
Applying Fibonacci to the swing low of $12.00 (2025-09-10) and high of $19.60 (2025-09-15) identifies critical levels: 23.6% ($18.33), 38.2% ($17.23), and 50% ($16.30). The 2025-09-16 low of $17.61 aligns closely with the 38.2% retracement, suggesting technical significance. A decisive break below $17.23 may expose the 50% level, which converges with the 20-day SMA and September breakout point ($16.17–$16.30), amplifying its support relevance.
Confluence and Divergence Summary
Notable confluence exists at $17.20–$17.60 (Fibonacci 38.2%, prior breakout high, and Bollinger lower band), making this a critical short-term support zone. Divergences appear between momentum oscillators and price: MACD’s bearish convergence and KDJ’s overbought reversal contrast with the primary moving average uptrend. Volume divergence on the recent decline (lower than rally volumes) offers tentative hope for trend resumption, but breach of key supports would invalidate this optimism.