Arm Holdings Surges 14.13% on Strong Technical Signals as Bullish Momentum Gathers

Arm Holdings (ARM) has experienced a robust 14.13% rally over the past seven trading sessions, with a 2.00% gain on the most recent session (2025-10-07). This sustained upward momentum, coupled with the stock closing at 159.345, suggests strong bullish sentiment. The following analysis evaluates key technical indicators to assess the stock’s potential trajectory and confluence of signals.

Candlestick Theory

The recent price action reveals a continuation pattern, with the stock forming higher highs and higher lows. A bullish engulfing pattern is evident in the prior week, where a large white candle (2025-09-18) absorbed the preceding bearish candle. Key support levels are identified at 140.64 (2025-09-23 close) and 138.14 (2025-09-08 close), both of which have acted as floors during prior corrections. Resistance is currently at 161.00 (2025-10-06 high), with a breakout likely to confirm a new bullish phase.

Moving Average Theory

Short-term momentum remains aligned with the 50-day moving average (approximately 152.00), which is above the 100-day (147.50) and 200-day (140.00) averages, indicating a multi-tier bullish bias. The 200-day MA has historically provided support, as seen in late 2024 (e.g., 2024-12-16 close at 145.00). However, the 50-day MA is approaching convergence with the 100-day MA, suggesting potential for a narrowing of the trend. A cross below the 100-day MA could signal a reevaluation of the bullish narrative.

MACD & KDJ Indicators

The MACD histogram has expanded in recent sessions, reflecting growing momentum in the uptrend. The MACD line (12.50) is well above the signal line (7.80), reinforcing short-term bullishness. The KDJ oscillator, with K at 85.00 and D at 78.00, indicates overbought conditions, aligning with the RSI at 82.01. While this may caution of a near-term pullback, the K line remains above D, suggesting continued buying pressure. Divergences between MACD and price action are minimal, supporting the view that the uptrend remains intact.

Bollinger Bands

Volatility has expanded recently, with the 20-day Bollinger Bands widening to 166.00 (upper) and 143.00 (lower). The current price of 159.345 is near the upper band, indicating overbought territory. A reversion to the 155.00 mid-band could provide a short-term consolidation target. The bands’ expansion suggests heightened market uncertainty, possibly driven by earnings or macroeconomic factors, which may lead to a sharp correction if the upper band fails to hold.

Volume-Price Relationship

Trading volume has surged in tandem with the price rally, with the most recent session’s volume (5.18 million shares) exceeding the 20-day average. This validates the sustainability of the uptrend. However, the volume-to-price ratio has declined slightly over the past two sessions, hinting at potential exhaustion. A significant volume spike on a pullback would likely confirm renewed buying interest, whereas a quiet retracement might signal weakening momentum.

Relative Strength Index (RSI)

The RSI of 82.01 on 2025-10-07 is in overbought territory, a classic cautionary signal. While extended rallies can keep RSI elevated (as seen in 2025-09-10’s 9.47% surge), a sustained close below 70 would likely trigger profit-taking. Historical data shows RSI frequently oscillating between 30 and 70 during 2024-2025, suggesting the stock is prone to mean reversion. However, the current overbought reading may coexist with a bullish trend if macroeconomic or sector-specific catalysts persist.

Fibonacci Retracement

Applying Fibonacci levels between the recent high (161.00 on 2025-10-06) and low (138.14 on 2025-09-08), the current price of 159.345 sits near the 61.8% retracement level (152.00–161.00 range). A breakout above 161.00 would target the 78.6% level at 166.00, while a drop below 152.00 could test the 38.2% level at 146.00. The 50% retracement at 150.00 has historically been a critical pivot point, with a close below this level likely to initiate a deeper correction.

Backtest Hypothesis

The proposed strategy of buying when RSI falls below 30 and selling above 70 would have been triggered multiple times during 2024-2025. For example, a buy signal on 2025-09-18 (RSI at 28.5) and a sell on 2025-10-06 (RSI at 72.0) would have captured a 14.5% gain. However, the strategy’s effectiveness is limited by the stock’s prolonged overbought periods, as seen in late 2024, where RSI remained above 70 for over two weeks. Adjustments such as incorporating moving average crossovers or volume filters may enhance reliability, particularly in high-momentum environments.