Atlassian Rises 3.34% as Bullish Engulfing Pattern and Support Level Signal Potential Rally

Atlassian (TEAM) rose 3.34% in the most recent session, closing at $149.39. The stock has exhibited a volatile price path over the past year, with key technical patterns emerging from its candlestick structure and momentum indicators. Below is a structured analysis of the stock’s technical profile.

Candlestick Theory

The candlestick pattern for Atlassian reveals a recent bullish reversal after a sharp decline in late September and early October 2025. A key support level is identified at $144.32 (2025-10-10 low), where the stock found buying interest following a 6.34% drop on 2025-10-01. Resistance is clustered near $149.55–$150.19, with multiple session highs and lows converging in this range. A bullish engulfing pattern formed on 2025-10-13, as the candle closed above the prior session’s high, suggesting potential for a near-term rally. However, bearish divergence is evident in the 2025-09-30 to 2025-10-01 period, where prices fell despite lower volume, indicating weakening bearish momentum.

Moving Average Theory

The 50-day moving average (calculated from historical data) currently sits above the 200-day MA, forming a bullish “golden cross” in late July 2025. However, the 50-day MA has since crossed below the 200-day MA, signaling a potential bearish trend. The 100-day MA at $185.44 acts as a critical psychological level: if prices fail to hold above this, it may confirm a deeper correction. The short-term 20-day MA ($146.87) is below the 50-day MA ($153.39), indicating a weakening upward bias.

MACD & KDJ Indicators

The MACD line turned positive in early October 2025, with a histogram expansion suggesting growing bullish momentum. However, the signal line remains below zero, indicating caution. The KDJ Stochastic oscillator shows %K at 65 and %D at 58, suggesting the stock is approaching overbought territory but not yet at critical levels. A crossover of %K above %D could confirm a short-term rally, though a bearish signal may follow if the RSI (discussed below) confirms overbought conditions.

Bollinger Bands

Volatility has expanded in recent weeks, with the upper band reaching $153.25 (2025-10-08 high) and the lower band dipping to $144.80 (2025-10-13 low). The price has oscillated between these bands, but the 20-day standard deviation suggests a potential contraction ahead. If the bands narrow, it may precede a breakout or breakdown. The current price of $149.39 is closer to the lower band, indicating potential for a rebound.

Volume-Price Relationship

Trading volume surged on the 3.34% rally (2.58M shares), outpacing the 10-day average volume of 2.1M. This supports the validity of the recent move. However, volume has been inconsistent during the recent consolidation phase (October 6–13), with a 20% drop in volume on the 2025-10-10 session despite a 2.15% decline. This weakens the bearish signal, as selling pressure appears to be waning.

Relative Strength Index (RSI)

The 14-day RSI stands at 62, suggesting the stock is neither overbought nor oversold. However, the RSI has been trending upward in tandem with the price, indicating strengthening momentum. A move above 70 would confirm overbought conditions, while a drop below 50 would signal a potential reversal. The RSI’s divergence from the price in late September (price falling while RSI stabilized) highlights a potential false signal, warranting caution.

Fibonacci Retracement

Key Fibonacci levels derived from the May–October 2025 swing high ($229.52) to the October 2025 low ($144.80) include:

- 38.2% retracement at $173.14 (resistance)

- 61.8% retracement at $164.48 (support)

The current price of $149.39 is approaching the 61.8% level, which may act as a short-term support if the RSI holds above 50. A break below this could target the 78.6% level at $150.09, reinforcing the bearish bias.

Backtest Hypothesis

The provided backtest strategy—buying when RSI exceeds 70 and selling when it drops below 50—was tested from 2022 to 2025. The strategy executed two trades:

1. Bought on 2023-01-31 (RSI: 65.5) at $161.62, sold on 2023-05-09 (RSI: 30.55) at $133.15, resulting in a -17.6% return.

2. Bought on 2025-07-09 (RSI: 83.9) at $220.89, sold on 2025-10-13 (RSI: 39.62) at $149.39, yielding a -32.4% return.

The total return of -50.0% underperformed the stock’s overall decline of -57.4% during the same period. This suggests the strategy failed to capitalize on overbought conditions, likely due to Atlassian’s prolonged bearish trend and the rarity of RSI overbought signals. The strategy’s reliance on RSI alone may lack nuance, as it ignores broader market context and divergences in volume and momentum indicators. Integrating Fibonacci levels or Bollinger Band breakouts could improve efficacy by filtering trades during periods of confirmed volatility.