Carvana Shares Jump 5.53% as Bullish Candlestick Patterns and Golden Cross Signal Uptrend Amid $362.86 Resistance

Carvana (CVNA) has surged 5.53% in the most recent session, extending its two-day rally to 5.67%. This sharp upward movement suggests strong short-term momentum, with candlestick patterns indicating a potential continuation of the uptrend. Key resistance levels are forming near the August 19 high of $361.14, while immediate support appears anchored at the August 14 close of $342.59. The bullish "harami" and "engulfing" patterns observed in the August 18–19 period reinforce the likelihood of further upside, though traders should monitor for bearish reversal signals if the price fails to break above $362.86 (August 21 high).

Moving Average Theory

The 50-day and 200-day moving averages intersect near $340–$345, with the current price ($357.81) decisively above both, signaling a bullish medium-term trend. The 100-day MA at approximately $345.11 aligns with the 200-day MA, suggesting a potential crossover scenario. Short-term momentum is further validated by the 50-day MA crossing above the 100-day MA, a "golden cross" pattern that historically precedes sustained rallies. However, the 200-day MA’s gradual upward drift implies that long-term bullishness hinges on maintaining a price above $336.96 (50-day MA as of August 22).

MACD & KDJ Indicators

The MACD histogram shows positive divergence, with the line above the signal line since mid-August, indicating strengthening bullish momentum. The KDJ (stochastic oscillator) confirms overbought conditions, with %K at 85 and %D at 75, but both lines trending upward—a sign of sustained buying pressure. This confluence suggests the uptrend may persist, though a bearish crossover in the KDJ could trigger a pullback to test the $342.59 support level.

Bollinger Bands

Volatility has expanded sharply, with the current price ($357.81) near the upper band, reflecting heightened bullish activity. The bands’ width has widened by 20% compared to mid-August levels, signaling increased uncertainty. A break above the upper band could extend the rally, but a retest of the middle band ($345.11) would validate the trend’s integrity.

Volume-Price Relationship

Trading volume has surged to 3.48 million shares on the recent breakout, a 20% increase from the previous session. This volume expansion aligns with the price’s upward thrust, suggesting strong conviction among buyers. However, if volume declines during the next rally without a price advance, it could signal weakening momentum.

Relative Strength Index (RSI)

The RSI stands at 72, entering overbought territory. While this typically warns of a potential correction, the RSI’s upward slope and alignment with the MACD suggest the uptrend remains intact. A drop below 60 would signal a shift to neutral conditions, but a sustained move above 70 could indicate a new bullish phase.

Fibonacci Retracement

The 38.2% retracement level at $345.11 has held as dynamic support, with the price now approaching the 50% level at $349.99. A breakout above $351.53 (August 15 high) would target the 61.8% level at $358.37, aligning with the current price trajectory.

Backtest Hypothesis

The backtest of an RSI-based strategy (buying above 70 and selling below 70) yielded a -19.01% return from 2022 to the present, underperforming the benchmark by 61.32%. This highlights the limitations of using RSI in isolation for CVNA, as its prolonged overbought periods and high volatility (42.27%) amplified risk without proportional reward. A refined approach might integrate RSI with volume analysis and Fibonacci levels to filter false signals. For instance, entering long positions when RSI exceeds 70 alongside a bullish MACD crossover and expanding Bollinger Bands could improve risk-adjusted returns.