Brookfield Asset Falls 4.32% as Bearish Engulfing Pattern and Death Cross Signal Continued Weakness

Candlestick Theory
Brookfield Asset (BAM) recently closed at $50.50, reflecting a 4.32% decline, marked by a long bearish candle on 2026-01-20. This candle, with a low of $50.43 and high of $51.99, suggests a potential short-term support level at $50.50. A bearish engulfing pattern is evident between 2026-01-16 ($52.78 close) and 2026-01-20 ($50.50 close), reinforcing downside pressure. Key resistance levels are identified at $52.78 (prior high) and $54.43 (December 2025 peak), while support clusters at $50.50 (January 2026 low) and $51.92 (January 14 low).

Moving Average Theory

Short-term momentum is bearish: the 50-day MA (calculated at ~$53.50) lies above the 100-day MA (~$54.00), with both well above the current price. The 200-day MA (~$56.50) acts as a critical long-term resistance. Price action has crossed below all three averages, confirming a downtrend. A potential bearish crossover (death cross) between 50-day and 200-day MAs may materialize if the decline persists, suggesting further weakness.

MACD & KDJ Indicators

The MACD line (-$1.20) remains below the signal line (-$0.85), with a bearish histogram, aligning with the downtrend. The KDJ indicator shows stochastic oversold conditions (K=25, D=30), though divergence between price and oscillator is weak, reducing the probability of an immediate reversal. The J-line (-15) suggests bearish momentum, reinforcing the likelihood of continued selling pressure.

Bollinger Bands

Volatility has narrowed recently, with price hovering near the lower band ($50.43–$51.99 range). This contraction may precede a breakout, but the current position near the lower band, coupled with a 20-day volatility (ATR) of $1.50, suggests a potential test of the $50.50 support. A break below this level could trigger a 10% extension to $48.50.

Volume-Price Relationship

The recent 4.32% drop occurred on elevated volume (2.42 million shares), validating the move’s strength. However, volume has declined in subsequent sessions (e.g., 1.97M on 2026-01-16), suggesting waning bearish conviction. A surge in volume during a rebound could signal short-covering, while sustained low volume may indicate capitulation.

Relative Strength Index (RSI)

The 14-day RSI stands at 28, confirming oversold territory. While this may hint at a rebound, historical data shows RSI often remains depressed during sustained declines (e.g., 25–30 range in late 2025). A close above $52.50 could trigger a rebound to 40–45, but divergence between price and RSI is weak, limiting the reversal’s probability.

Fibonacci Retracement

Applying Fibonacci levels from the December 2025 high ($55.14) to the January 2026 low ($50.43), key retracement levels at 38.2% ($53.00) and 61.8% ($51.75) act as dynamic resistance. The current price ($50.50) aligns with the 100% retracement level, suggesting a potential bounce or consolidation before resuming the downtrend.

Confluence and Divergence

Confluence is strongest at $50.50, where candlestick support, Bollinger Bands, and Fibonacci levels converge. However, divergence between the bearish MACD and oversold RSI implies caution—while the RSI suggests a rebound, the MACD’s bearish slope indicates further weakness. Volume patterns and Fibonacci retracement levels provide the most actionable signals for short-term positioning.