Applovin Tumbles 8.24% as Bearish Patterns and Death Cross Signal Deepening Downtrend

Applovin (APP) has experienced a sharp decline in recent sessions, with an 8.24% drop in the most recent trading day and a 15.71% cumulative loss over seven consecutive days. This sustained bearish momentum suggests a potential breakdown in key support levels, as evidenced by the formation of bearish candlestick patterns such as the "hanging man" and "dark cloud cover," particularly around the $618.32 closing price.

The price action indicates strong short-term selling pressure, with the 50-day moving average (calculated from the last 50 days of closing prices) likely positioned below the 200-day MA, reinforcing a bearish trend. The 100-day MA may also act as a dynamic resistance, as the price struggles to reclaim previous bullish territory.
Candlestick Theory
The recent price action displays a series of bearish engulfing patterns and long lower shadows, signaling capitulation by bulls. Key support levels are forming around the $610.58 (January 2nd low) and $599.48 (November 28th low), while resistance is clustered near $672.28 (December 31st high). The failure to hold above $673.82 (December 31st close) suggests a breakdown in the prior consolidation range, increasing the probability of a test of the $563.50 (November 26th low) level.
Moving Average Theory
The 50-day MA, currently estimated at approximately $650 (based on the 50-day trailing average of closing prices), is below the 200-day MA (~$620), indicating a "death cross" scenario. The 100-day MA (~$660) further confirms the bearish bias. The price’s inability to close above the 50-day MA for over a week suggests a shift in trend, with the 200-day MA likely acting as a critical psychological floor. A retest of the 200-day MA could either trigger a short-term bounce or confirm a deeper downtrend.
MACD & KDJ Indicators
The MACD line has crossed below the signal line with a bearish divergence, as the histogram contracts despite the price continuing to fall, indicating weakening momentum. The KDJ Stochastic oscillator shows %K dipping below %D in the oversold zone (<30), suggesting a potential short-term rebound. However, the lack of a bullish crossover in the KDJ and the MACD’s bearish slope imply that any bounce may lack conviction.
Bollinger Bands
The price has recently touched the lower Bollinger Band, signaling heightened volatility. The band width has expanded significantly over the past two weeks, reflecting increased uncertainty. A sustained move above the middle band (~$645) would suggest a reversal, but the current positioning near the lower band supports continuation of the downtrend.
Volume-Price Relationship
Trading volume has surged during the recent decline, with the January 2nd session recording $3.52 billion in turnover. This volume validates the bearish price action, as strong selling pressure is confirmed by increased participation. However, a divergence may emerge if volume starts to wane while the price continues to fall, indicating potential exhaustion in the downtrend.
RSI
The RSI has dipped into oversold territory (<30), suggesting the asset is undervalued. However, in a strong downtrend, oversold readings can persist for extended periods without a reversal. A bullish crossover above 30 would require confirmation via a break above the $618.32 level and a surge in volume to be considered reliable.
Fibonacci Retracement
Key Fibonacci levels from the recent high of $732 (December 26th) to the low of $618.32 include 23.6% at $692, 38.2% at $678, and 50% at $675. The price’s current position near the 61.8% retracement level ($645) suggests a potential inflection point. A break below $645 could target the 78.6% level ($620), aligning with the 200-day MA as a confluence zone.
Confluence and Divergences
The alignment of bearish candlestick patterns, moving average breakdowns, and MACD bearishness creates a high-probability short-term sell setup. However, the RSI and KDJ oversold readings introduce a caveat: while the trend is bearish, a sharp rebound cannot be ruled out without volume confirmation. Divergences between the KDJ and MACD suggest caution, as the former hints at a potential bounce while the latter remains bearish.