BMY Falls 0.68% as 3-Day Slide Drives 4.83% Drop Amid Bearish Patterns and Death Cross

Bristol-Myers Squibb (BMY) has fallen 0.68% in the most recent session, extending a three-day losing streak with a cumulative decline of 4.83%. The stock is currently trading near key support levels established by recent candlestick patterns, including a potential bearish engulfing formation on October 2 and a hanging man pattern on October 3. These patterns suggest continued bearish momentum, though a rejection at the $45.14 level (October 6 close) could provide short-term support. Resistance is clustered around $47.43 (October 1 high) and $48.58 (October 1 high), where prior attempts to rally have failed.

Candlestick Theory

The recent price action shows a descending channel with bearish bias, reinforced by the failure to hold above the $46.175 level (October 3 high). A break below $44.66 (October 3 low) could target $44.05 (October 4 low), with a potential continuation of the downtrend. However, the absence of a decisive bearish reversal pattern (e.g., a shooting star or dark cloud cover) suggests volatility remains elevated, and a test of the $45.14 level may attract buyers.

Moving Average Theory

The 50-day MA (currently ~$46.80) is below the 200-day MA (~$48.10), forming a bearish "death cross" setup. The 100-day MA (~$47.30) adds confluence, with the price trading below all three indicators. This alignment confirms a medium-term downtrend, though the 50-day MA’s gradual flattening may hint at decelerating bearish momentum. A close above the 50-day MA would be a necessary condition for trend reversal, but current momentum suggests this is unlikely in the near term.

MACD & KDJ Indicators

The MACD histogram is negative and widening, with the MACD line (-1.2) below the signal line (-0.9), reinforcing bearish momentum. The KDJ indicator shows the J-line at 12.3 and D-line at 28.4, with the K-line (15.7) failing to cross above the D-line—a bearish divergence. This suggests overbought conditions are absent, but the lack of a short-term oversold reading (RSI at 29.6) indicates the downtrend may persist. A KDJ crossover to the upside could signal a short-term bounce, though confluence with volume is needed for confirmation.

Bollinger Bands

Volatility has expanded recently, with the upper band at $48.20 and lower band at $44.80. The price is currently near the lower band, aligning with the RSI’s oversold reading. However, the bands’ width suggests sustained volatility, and a break below the lower band could trigger a continuation of the downtrend. A rejection at the lower band, coupled with a volume spike, might indicate short-term support, but the broader context remains bearish.

Volume-Price Relationship

Trading volume has spiked on recent declines (e.g., 27.6 million shares on October 2) but has since moderated to ~19.2 million shares. This suggests initial selling pressure is waning, though volume remains above average, indicating structural bearishness. A sustained drop in volume during consolidation phases would be a positive sign for trend exhaustion, but current levels support the view that sellers remain active.

Relative Strength Index (RSI)

The RSI stands at 29.6, firmly in oversold territory. While this typically signals potential for a short-term rebound, the RSI’s failure to form a bullish divergence (price lows < RSI lows) weakens its reliability. Historical data shows the RSI has lingered in oversold conditions during the 2024-2025 period, suggesting structural bearishness rather than a temporary pullback. A close above 30 would be necessary for a bullish signal, but confluence with other indicators is lacking.

Fibonacci Retracement

Applying Fibonacci levels between the October 1 high ($48.58) and October 4 low ($44.05), key retracement levels at 38.2% ($46.20) and 61.8% ($45.14) align with recent price action. The 61.8% level coincides with the October 6 close, indicating a potential support zone. A break below this level would target the 78.6% retracement at $44.30, with a continuation of the downtrend likely.

Backtest Hypothesis

The proposed strategy of buying BMY when its RSI is oversold has shown limited efficacy historically. While the 30-Day win rate (54.76%) outperforms shorter timeframes, the average returns remain near breakeven, with a maximum gain of only 0.78% over 24 days. This suggests that even in oversold conditions, the stock’s bearish fundamentals or market sentiment dominate, making RSI-based entries suboptimal. Traders should consider combining RSI signals with volume and Fibonacci levels for higher-probability setups, but standalone RSI trades may not justify the risk.