Celestica (CLS) Surges 11.99% on Bullish Technicals Despite Overbought Warnings

Celestica (CLS) is currently exhibiting a strong bullish trend, with a 4.82% gain in the latest session and a 11.99% rise over four consecutive days. This upward momentum is supported by multiple technical indicators suggesting continued strength, though caution is warranted due to overbought conditions.
Candlestick Theory
The recent price action features a series of higher highs and higher lows, indicative of a sustained uptrend. Key support levels can be identified at prior consolidation zones (e.g., the $300–310 range in early December), while resistance is forming near the recent peak of $344.61 (November 24). A bullish engulfing pattern emerged on November 24, confirming a breakout from a descending triangle. However, the price is now testing the upper boundary of this pattern, and a close above $344.61 could trigger further gains.
Moving Average Theory
Short-term moving averages (50-day at ~$315, 100-day at ~$300) are above long-term averages (200-day at ~$285), confirming an uptrend. The 50-day MA crossing above the 200-day MA in late November (a "golden cross") added conviction to the bullish bias. The 20-period MA currently sits at ~$330, aligning with recent support levels. A pullback to this MA could act as a dynamic support, suggesting the trend may persist if buyers hold here.
MACD & KDJ Indicators
The MACD histogram has expanded into positive territory, with the MACD line above the signal line, reinforcing bullish momentum. However, the KDJ stochastic oscillator is in overbought territory (K ~85, D ~75), raising the risk of a near-term pullback. A bearish divergence is observed between price and the K-line on December 1–5, where prices hit new highs while K declined, hinting at potential exhaustion.
Bollinger Bands
Volatility has expanded as the price approaches the upper Bollinger Band ($343 on December 8), suggesting overbought conditions. The band width has widened since mid-November, reflecting increased trading interest. A retest of the lower band (~$300–310) could occur if volatility contracts, but a break above the upper band may require a sustained move beyond $350 to validate a new trend.
Volume-Price Relationship
Trading volume has surged during the recent rally, peaking at 7.32 million on December 8, validating the price increase. However, volume has shown signs of tapering in late December, which could indicate waning momentum. A divergence between volume and price (e.g., lower volume on higher closes) may signal weakening demand.
Relative Strength Index (RSI)
The 14-day RSI is approaching 70, entering overbought territory. While this does not guarantee a reversal, it suggests a potential correction is probable. A move below 60 would increase the likelihood of a pullback to the 50–60 RSI range.
Fibonacci Retracement
Key Fibonacci levels from the November 24 high ($344.61) to the December 1 low ($280.06) include 23.6% at $318 and 38.2% at $307. The price has recently tested the 23.6% level, which aligns with the 50-day MA. A breakdown below the 50% retracement ($297) could invalidate the uptrend and target the 61.8% level at $287.

The confluence of bullish candlestick patterns, moving average alignment, and expanding MACD supports a continuation of the uptrend. However, overbought RSI and KDJ, along with bearish volume divergence, highlight risks of a near-term correction. Traders should monitor the $310–320 range as critical support; a sustained break below this could trigger a Fibonacci-based pullback. Conversely, a close above $344.61 would strengthen the case for a new bullish phase. Divergences between price and momentum indicators suggest caution, particularly in the short term.