Celestica Plunges 8.28% as Bearish Reversal Signals Mount After Rally

Celestica (CLS) declined 8.28% in the latest session, closing at 194.75 after trading between 193.17 and 211, reflecting heightened selling pressure after a prolonged uptrend.
Candlestick Theory
Recent sessions show a distinct bearish reversal pattern. The August 28 candle formed a shooting star (high: 214.63, close: 212.33), signaling exhaustion after the rally, followed by an August 29 bearish engulfing candle that erased prior gains and closed near its low (194.75). This confluence identifies 214–215 as a critical resistance zone, with immediate support at 193.17 (August 29 low). A breach below this level may expose the July swing low near 170.
Moving Average Theory
The 50-day moving average (≈184) provided dynamic support during the July–August rally but was breached decisively on August 29. The 200-day MA (≈132) remains ascending, confirming the primary uptrend, but the 50/100-day MAs are now converging. A sustained break below the 100-day MA (≈165) would signal a medium-term trend reversal. The 50-day MA crossing below the 100-day MA would further validate bearish momentum.
MACD & KDJ Indicators
MACD (12,26,9) turned negative in late August, with the histogram accelerating downward after the signal line crossover. This confirms waning bullish momentum. Concurrently, the KDJ oscillator exited overbought territory (K/D >80 on August 27) and plunged toward 40, nearing a bearish crossover. While not yet oversold, the sharp MACD/KDJ deterioration aligns with the candlestick reversal, suggesting further downside.
Bollinger Bands
Volatility expanded sharply on August 29 as price pierced the lower Bollinger Band (20-day SMA ≈197, 2σ deviation), ending a period of band contraction. This typically precedes directional acceleration. The close below the lower band suggests oversold conditions short-term, but a failure to reclaim the 196–197 midline would reinforce bearish control.
Volume-Price Relationship
Volume surged to 3.94M shares on August 29 (vs. 3.22M the prior day), validating the bearish breakout on high participation. This distribution signal contrasts with the July rally, which featured higher volume on up days (e.g., July 29: 14.57M shares). Declining volume during August’s modest rebounds (e.g., August 27: 1.76M shares) also reflected weak conviction.
Relative Strength Index (RSI)
The 14-day RSI retreated from 65 (August 28) to 45 after the sell-off, exiting neutral territory. While not oversold (sub-30), the sharp momentum drop supports the bearish reversal thesis. Note that RSI diverged negatively in late August—price printed higher highs while RSI peaked lower near 70 (vs. 75 in July). This warns of trend exhaustion.
Fibonacci Retracement
Applying Fib levels to the rally from the April low (50.35) to the August high (214.63) reveals key supports: the 23.6% level at 177, the 38.2% level at 155, and the 50% level at 132. The 155–177 zone aligns with the 100-day MA and July consolidation, creating a high-probability demand area. A close below 177 would open a path toward 155.
Confluence and Divergences
Confluence reinforces 214–215 as resistance (shooting star + prior peak) and 177 as critical support (Fibonacci + volume cluster). Bearish agreement is evident via:
- Candlestick reversal + volume confirmation.
- MACD/KDJ deterioration + RSI divergence.
Divergences are limited, though Bollinger Band oversold readings may clash with MACD’s lack of oversold signals if selling persists.
Outlook
Celestica’s technical structure shifted bearish short-term, driven by decisive breaks below the 50-day MA and key support at 196. While the primary uptrend remains intact, further downside toward 177–155 appears probable. A recovery above 211 (August 29 high) would invalidate the immediate bearish thesis. Traders should monitor the 177 support and RSI oversold thresholds for potential stabilization.