Carvana (CVNA) Plunges 6.16% as Bearish Indicators Confirm Downtrend

Carvana (CVNA) fell 6.16% in the most recent session, closing at $401.11. This sharp decline follows a volatile week marked by a 14.17% drop on January 28 and a 4.24% rebound the next day. The price action suggests bearish momentum, with key support levels forming near the 413.30–410.04 range and resistance clustered around 445.00–477.59.

Candlestick Theory

The recent bearish engulfing pattern on January 30, characterized by a long lower shadow and a close near the session low, indicates strong selling pressure. Key support levels include the 413.30 intraday low (Jan 29) and the 396.61 low (Jan 30), while resistance is concentrated at 427.44 (Jan 29) and 445.00 (Jan 28). A break below 401.11 could trigger a test of the 374.55–390.87 range, with potential for a continuation pattern if the price fails to reclaim 427.44.

Moving Average Theory

Short-term trends are bearish: the 50-day MA (approx. 430–440) and 100-day MA (approx. 445–455) are well above the current price, confirming a downtrend. The 200-day MA (approx. 390–400) acts as a critical support level. The price’s recent crossover below the 50-day MA suggests a bearish bias, though a sustained close above 427.44 could signal a potential reversal.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the line crossing below the signal line, reinforcing bearish momentum. The KDJ indicator shows oversold conditions (K=25, D=30), but the stochastic oscillator’s slow divergence (price making lower lows while K fails to do so) may indicate weakening bearish momentum. A close above 427.44 could trigger a bullish crossover in the KDJ, suggesting a short-term reversal.

Bollinger Bands

Volatility has expanded, with the price trading near the lower band (approx. 395–400), a classic bearish signal. The bands’ width has widened since late January, reflecting increased uncertainty. A rebound off the lower band could test the 413.30–427.44 range, while a break below the band may target 374.55–390.87.

Volume-Price Relationship

Trading volume surged to 3.8 million shares on the January 30 decline, validating the bearish move. However, volume has remained elevated despite the price drop, suggesting sustained selling pressure. A decrease in volume during a rebound could indicate waning bearish conviction, while a surge on a breakout below 401.11 would confirm further weakness.

Relative Strength Index (RSI)

The 14-day RSI stands at approximately 28, indicating oversold conditions. However, RSI has not yet formed a bullish divergence, and the price remains below key support levels. A close above 427.44 could push RSI above 40, signaling a potential short-term rebound, though a sustained move above 445.00 would be needed to confirm a reversal.

Fibonacci Retracement

Key Fibonacci levels from the January 28 low (374.55) to the January 27 high (484.79) include 61.8% at 410.00 and 50% at 429.67. The current price near 401.11 aligns with the 38.2% retracement level (approx. 405.00), suggesting potential for a bounce. A break below 410.00 could target the 38.2% level at 390.87.

Confluence between Bollinger Bands contraction and RSI oversold conditions suggests a potential short-term rebound, but the bearish MACD and KDJ divergence caution against overbuying. Divergences in volume and RSI may indicate a weakening downtrend, though a sustained break below 401.11 would reinforce bearish momentum. Key watchpoints include the 427.44–445.00 resistance cluster and the 396.61–413.30 support range.