Applied Materials Plunges 14% To $161.75 As Bearish Signals Converge

Candlestick Theory
Applied Materials exhibits a pronounced bearish pattern, culminating in a 14.07% single-day decline on August 15, 2025, closing near the session low ($161.755) after testing resistance at $167.5. This follows a two-day capitulation totaling 14.88%, characterized by long red candles with minimal upper shadows—indicating sustained selling pressure. Key support now materializes at the August 15 low of $161.71, while the pre-plunge consolidation zone near $188-$190 establishes formidable resistance. The absence of reversal patterns (e.g., hammers or engulfing candles) in recent sessions underscores persistent downside momentum.
Moving Average Theory
The 50-day moving average (MA) has decisively crossed below both the 100-day and 200-day MAs—a "death cross" configuration signaling entrenched bearish bias. Current price ($161.755) trades significantly below all three MAs, with the 50-day MA accelerating downward near $176. The 200-day MA (approximately $173) now acts as dynamic resistance. This alignment reflects a complete breakdown of long-term trend structure, with the widening gap between short- and long-term MAs confirming accelerating bearish momentum.
MACD & KDJ Indicators
MACD histogram values remain in negative territory with consistent downward trajectory, reflecting bearish momentum dominance. The signal line’s persistent position below the MACD line since early August validates weakening price structure. Concurrently, KDJ oscillators show %K (17.2) and %D (21.8) deeply oversold but lacking bullish crossover confirmation. While MACD-KDJ convergence near oversold extremes suggests potential exhaustion, neither indicator yet signals reversal. This alignment indicates continued bearish control, though oversold compression may precede short-term stabilization.
Bollinger Bands
Price breached the lower Bollinger Band ($168) during the August 15 selloff, reflecting extreme downside volatility. Bandwidth expansion to 9-month highs confirms elevated volatility expectations. Historically, such violations often precede technical rebounds, but the lack of immediate mean reversion and close near the band’s lower limit signals ongoing vulnerability. The middle band (20-day SMA near $178) now serves as a primary resistance target for any countertrend rallies.
Volume-Price Relationship
Record volume of 31.7 million shares accompanied the August 15 collapse—273% above the 30-day average—validating conviction behind the breakdown. This distribution climax followed a volume surge on July 31 (-4.93% decline), foreshadowing institutional exodus. Current volume divergence (higher volume on down days versus up days) structurally supports bearish momentum, though climactic selling may indicate capitulation nearing completion.
Relative Strength Index (RSI)
Daily RSI (14-period) plunging to 24.6 signals severely oversold conditions, well below the 30 oversold threshold. While this may foreshadow a technical bounce, it coincides with no bullish divergence on higher timeframes. Notably, RSI dipped below 30 six times in the past year, preceding recoveries averaging 8-12%. However, the current reading—coupled with macro breakdowns—suggests oversold conditions could persist before meaningful mean reversion occurs.
Fibonacci Retracement
Applying Fibonacci to the recent downswing from the July 30 high ($190.87) to the August 15 low ($161.71):
- Key Levels: 23.6% ($168.59), 38.2% ($172.84), 50% ($176.29)
Confluence exists near $168.50–169.00 (23.6% retracement + previous August 5 swing low). A close above this zone would signal bearish exhaustion. Failure to reclaim $168.59 maintains bearish continuity, targeting extensions toward $154–156 (127.2–161.8% projections).
Confluence & Divergence Observations
Bearish convergence dominates: Climactic volume, oversold RSI, and Bollinger Band breach align with MA death crosses. KDJ and MACD oscillators show parallel deterioration without divergence, negating reversal signals. Critical resistance confluence forms at $168.50–170 (Fibonacci 23.6% + lower Bollinger Band + prior support). Bullish divergence remains absent across indicators—sustained trade below $168.59 suggests vulnerability toward $154. While oversold extremes imply near-term consolidation probability, the burden of proof rests on bulls to reclaim $170 before technical stabilization can materialize.