BP's 3.37% Drop Forms Bearish Engulfing Pattern as Technical Indicators Signal Downtrend

Candlestick Theory
The recent 3.37% decline in BP’s price forms a long bearish candle, suggesting strong selling pressure. A potential bearish engulfing pattern is emerging, as the prior bullish candle (34.47 on 12/17) is now fully contained within the recent bearish move.

Key support levels are identified at 33.22 (Dec 18 low) and 32.74 (Dec 16 low), while resistance remains at 34.47. The price action indicates a breakdown below the 34.00 psychological level, which may trigger further short-term bearish momentum.
Moving Average Theory
Short-term momentum is bearish, with the 50-day MA (approximately 34.50) and 100-day MA (34.80) both above the current price of 33.31, signaling a downtrend. The 200-day MA (33.00) offers limited near-term support but may be tested in the coming weeks. A crossover below the 200-day MA would confirm a stronger bearish bias, aligning with the recent price action.
MACD & KDJ Indicators
The MACD histogram has turned negative, with the line crossing below the signal line, reinforcing bearish momentum. The KDJ indicator shows %K (25) below %D (40), suggesting oversold conditions but lacking immediate reversal signals. Divergence between the KDJ and price action is minimal, indicating alignment in the downward trend.
Bollinger Bands
Volatility has expanded, with the price testing the lower Bollinger Band (32.50). The 20-day standard deviation is elevated, reflecting increased uncertainty. A rebound from the lower band could signal a temporary bounce, but sustained recovery is unlikely without a break above the mid-band (34.00).
Volume-Price Relationship
Trading volume surged to 15.2 million shares on the most recent session, validating the bearish move. However, volume has been inconsistent on prior down days, suggesting mixed conviction. If volume remains high on subsequent bearish closes, the downtrend may persist; declining volume could hint at exhaustion.
Relative Strength Index (RSI)
The RSI has dipped below 30 (oversold territory), indicating potential for a short-term rebound. However, in a strong downtrend, RSI can remain oversold for extended periods. A close above 34.00 would be required to confirm a bullish reversal, while continued selling may keep RSI depressed.
Fibonacci Retracement
Key Fibonacci levels from the recent high (37.44 on 12/4) to low (33.22 on 12/18) include 61.8% at 34.70 and 50% at 35.33. The current price of 33.31 aligns with the 38.2% retracement level, offering limited near-term support. A break below 33.22 would target the next Fibonacci level at 32.00.
Confluence and Divergence
Confluence is observed at the 33.22 support level, where Fibonacci, Bollinger Bands, and candlestick patterns converge. However, divergence exists between the oversold RSI and bearish MACD, suggesting caution. While technical indicators broadly align in signaling a downtrend, a sustained rebound above 34.47 would require confirmation from volume and momentum indicators to invalidate the bearish bias.