Arista Networks (ANET) Falls 4.89% on Bearish Candlestick Patterns and Death Cross as Three-Day Slide Hits 9.82%

Arista Networks (ANET) has experienced a 4.89% decline in the most recent session, marking a three-day losing streak with a cumulative drop of 9.82%. This sharp correction aligns with bearish candlestick patterns, including a series of lower highs and lower lows, suggesting momentum is favoring sellers. Key support levels are evident near $123.72 (the recent low) and potentially $118.00 (a prior consolidation zone), while resistance is clustered around $130.08 and $132.50, where prior attempts to rally have stalled.

Candlestick Theory

The recent price action features a bearish engulfing pattern on the first day of the decline, followed by a confirmation of weakness with a long lower shadow on the second day. The third session’s close near the low reinforces bearish control. These patterns suggest a potential continuation of the downtrend if the $123.72 support level is not decisively breached. Conversely, a rebound above $130.08 could trigger short-term bullish momentum, though the broader context remains bearish.

Moving Average Theory

The 50-day moving average (approximately $130.00) has crossed below the 200-day MA (around $135.00), forming a bearish “death cross.” The 100-day MA (~$129.00) is also acting as a dynamic resistance. The current price of $123.72 sits well below all three MAs, confirming a medium-term downtrend. A break above the 50-day MA would be a prerequisite for trend reversal, but this appears unlikely without a significant volume surge.

MACD & KDJ Indicators

The MACD histogram has contracted into negative territory, with the MACD line crossing below the signal line, signaling bearish momentum. The KDJ indicator shows the K-line (~25) below the D-line (~30), with both in oversold territory, suggesting potential for a short-term bounce. However, a divergence between KDJ and price (e.g., K-line failing to cross above D-line) would indicate continued weakness.

Bollinger Bands

The price is currently near the lower Bollinger Band ($123.72), indicating heightened volatility. The bands have expanded following a period of contraction in early January, suggesting a breakout to the downside is in progress. A rebound above the middle band ($129.50) would signal reduced volatility and possible exhaustion of the sell-off, though this is a high bar given the current context.

Volume-Price Relationship

Trading volume has surged on the recent decline, with the three-day average volume rising to $1.1 billion, validating the bearish move. However, volume has not spiked on the most recent session, which may suggest weakening conviction among sellers. A divergence between price and volume (e.g., declining volume during continued price drops) could signal near-term exhaustion, but this remains unconfirmed.

Relative Strength Index (RSI)

The RSI has fallen to ~25, indicating oversold conditions. While this may trigger short-covering or a technical bounce, the RSI has remained below 30 for an extended period during this downtrend, suggesting the bearish momentum is resilient. A sustained close above 30 would be a critical reversal signal, but this requires a robust break above $130.08.

Fibonacci Retracement

Key Fibonacci levels from the January 8 high ($129.60) to the January 5 low ($122.81) include 38.2% at $125.50 and 50% at $126.20. A rebound to these levels could attract buyers, but a breakdown below the 61.8% level ($123.00) would strengthen the case for further downside.

Confluence and Divergences

The $123.72 level is a confluence of Fibonacci support, Bollinger Band, and candlestick significance, making it a critical watchpoint. A rejection here with a bullish KDJ crossover could trigger a short-term rally. However, the MACD and RSI remain bearish, creating a divergence that underscores the fragility of any potential bounce.

The near-term outlook for ANET remains bearish, with strong confluence of moving averages, candlestick patterns, and momentum indicators. A break below $123.72 could target $118.00, but a short-term rebound is possible if the 38.2% Fibonacci level holds. Traders should monitor volume dynamics and RSI behavior for early signs of reversal, while the broader trend suggests continued downside risk unless there is a decisive break above $130.08 with confirmation from momentum indicators.