Carvana (CVNA) Drops 2.54% as Death Cross and Bearish Technicals Signal Prolonged Downtrend

Carvana (CVNA) closed at $360.91 on October 8, 2025, marking a 2.54% decline. Candlestick Theory reveals a bearish bias as the stock forms multiple lower highs and lower lows, with long upper shadows suggesting rejection of higher prices. Key support levels at $360-365 have shown resilience, while resistance at $370-375 remains unbroken. The pattern indicates a potential continuation of the downtrend or a short-term reversal if bullish volume confirms a bounce.

Moving Average Theory confirms the bearish setup, with the 50-day MA below both the 100-day and 200-day MAs, signaling a death cross. This alignment suggests weakening short-term momentum relative to the long-term trend, reinforcing the likelihood of further declines in the near term.

MACD & KDJ Indicators highlight a death cross on October 8, with the MACD histogram shrinking, which may indicate waning downward momentum. The KDJ oscillator, however, shows the stock in overbought territory—a divergence that could signal a potential reversal. The J line’s upward movement hints at short-term buying interest, though the broader bearish context remains intact.

Bollinger Bands show the price trading near the lower band, suggesting oversold conditions. The recent contraction of bands indicates reduced volatility, which often precedes a breakout. However, the absence of a breakout above the upper band implies the downtrend may persist, with consolidation expected before the next directional move.

Volume-Price Relationship supports the bearish narrative, as increased volume accompanies recent declines, indicating strong selling pressure. The lack of extreme volume spikes, however, suggests the downtrend may not yet be exhausted. A volume contraction could signal a temporary pause in the sell-off, offering a potential entry point for cautious buyers.

RSI at 30 indicates oversold territory, but in a strong downtrend, this level can act as a false signal. The RSI’s formation of higher lows may hint at a near-term rebound, yet confirmation through a breakout above $370 is necessary to validate any reversal.

Fibonacci Retracement levels suggest the stock is testing the 38.2% retracement at $365. A hold here could target the 50% level at $360, while a breakdown could push toward $355. Resistance at $370 and $375 offers critical thresholds for trend continuation.

Backtest Hypothesis

The backtest strategy evaluates MACD Death Cross events for CVNA from 2022 to 2025. Over 34 events, the 3-day win rate was 38.24%, 10-day at 44.12%, and 30-day at 58.82%, with average returns of +1.29%, +1.63%, and -0.96%, respectively. The maximum return of 16.40% occurred on day 57, highlighting potential for select long-term gains. The recent death cross on October 8 aligns with the backtest’s bearish signal, supported by contracting Bollinger Bands and bearish candlesticks. However, Carvana’s fundamentals—such as revenue growth and operational expansions—provide a counterbalance. Investors should weigh technical signals against fundamental resilience while monitoring legal risks that could amplify volatility.