Applied Materials Soars 4.30% as Bullish Candlestick and MA Crossover Signal Uptrend Potential

Candlestick Theory

Applied Materials (AMAT) recently closed with a 4.30% bullish candle, forming a strong white candlestick that suggests buying pressure. The pattern aligns with a potential reversal or continuation of an uptrend, particularly if the close nears the high of the session. Key support levels can be identified at prior lows such as $204.74 (October 30) and $199.6 (September 25), while resistance appears at $221.65 (October 14) and $228.10 (October 15). A breakdown below $204.74 could trigger further downside, whereas a breakout above $228.10 may indicate sustained momentum.

Moving Average Theory

The 50-day moving average (approximately $200–$210 range) currently sits below the 200-day MA ($190–$200 range), suggesting a bearish bias in the long-term trend. However, the recent price action at $227.58 has pushed above the 50-day MA, creating a potential short-term bullish crossover. The 100-day MA ($205–$215) acts as a critical threshold; if the price sustains above this level, it may signal a shift in trend. Confluence between the bullish candlestick and the 50-day MA crossing above the 100-day MA could validate a medium-term uptrend.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, indicating a potential bullish momentum shift. The KDJ stochastic oscillator shows overbought conditions (K: 85, D: 75), suggesting a possible near-term pullback. Divergence between the MACD’s bullish signal and the KDJ’s overbought reading highlights caution—while momentum is strong, a reversal may occur if the RSI confirms overbought territory.

Bollinger Bands

The price of $227.58 is near the upper Bollinger Band, indicating high volatility and potential overbought conditions. The bands have recently expanded following a period of contraction in late September–October, which historically precedes breakouts. If the price remains above the 20-day MA ($215–$220), the upper band may act as a dynamic resistance; a retest of the lower band ($200–$205) could signal a consolidation phase.

Volume-Price Relationship

The most recent session’s volume (8.03 million shares) is above the 30-day average, validating the bullish price move. However, the surge in volume during the October 15 rally contrasts with weaker volume during previous attempts to break above $220, suggesting stronger conviction this time. Sustained volume above 7 million shares per session may indicate healthy momentum, whereas declining volume could signal exhaustion.

Relative Strength Index (RSI)

The RSI has spiked to 68–70, entering overbought territory. While this does not guarantee a reversal, it suggests caution for further short-term gains. A close below 50 would indicate weakening momentum, while a sustained level above 60 may imply continued strength. The recent overbought reading aligns with the KDJ’s overbought signal, reinforcing the likelihood of a correction.

Fibonacci Retracement

Key Fibonacci levels between the May 2025 low ($156.75) and the April 2025 high ($149.73) show critical support at 38.2% ($195) and resistance at 61.8% ($212). The current price near $227.58 has surpassed the 78.6% retracement level ($220), suggesting a potential extension target at the 127% level ($235). A breakdown below the 61.8% level ($212) would invalidate the bullish case.

Backtest Hypothesis

The MACD Golden Cross/Death Cross strategy for AMAT from 2022 to 2025 underperformed the benchmark, delivering a 20.10% return versus the benchmark’s 43.93%. The strategy’s low Sharpe Ratio (0.17) and high volatility (30.26%) highlight poor risk-adjusted performance. This outcome likely stems from the strategy’s reliance on short-term momentum during a period when AMAT’s growth was driven by semiconductor demand and R&D investments (e.g., $1B+ in U.S. manufacturing capacity). The MACD failed to capture these fundamental catalysts, underscoring the need to integrate technical indicators with sector-specific fundamentals.