Celestica Shares Rally 3.02% After 8.28% Drop as Bullish Engulfing Pattern and Moving Averages Signal Uptrend

Celestica (CLS) closed the most recent session up 3.02% at $200.63, marking a significant rebound from the prior session's 8.28% decline. This sharp reversal suggests potential short-term volatility and warrants a detailed technical analysis to assess trend sustainability and potential entry points.

Candlestick Theory

The recent price action reveals a bullish engulfing pattern on 2025-09-02, where the long white candle fully absorbs the preceding black candle, signaling a potential reversal from bearish to bullish momentum. Key support levels appear at $183.66 (recent low) and $179.01 (August 22 low), while resistance is clustered around $200.64 (recent high) and $214.63 (August 28 high). A breakdown below $183.66 could target $179.01, whereas a breakout above $200.64 may test $214.63.

Moving Average Theory

The 50-day MA currently sits at $188.92, well above the 200-day MA of $118.10, indicating a bullish long-term trend. However, the 100-day MA ($179.33) is converging with the 50-day MA, suggesting potential acceleration in the near-term upward trend. A crossover of the 50-day MA above the 200-day MA would reinforce the bullish case, though the recent price action has already outperformed the 50-day MA by ~6.2%, hinting at overbought conditions.

MACD & KDJ Indicators

The MACD histogram has turned positive after a bearish divergence, aligning with the recent price rebound. The KDJ indicator shows a stochastic reading of 82.5 (K) and 78.9 (D), suggesting the asset is approaching overbought territory. While this may indicate a potential pullback, the absence of bearish divergence in the MACD supports continuation of the uptrend.

Bollinger Bands

Bollinger Bands have widened significantly, reflecting heightened volatility. The current price of $200.63 is near the upper band, indicating a potential overbought condition. A retest of the middle band ($190.00) could act as a short-term target, but the expanding bands suggest further volatility rather than a consolidation phase.

Volume-Price Relationship

Volume spiked to 3.18 million shares on the most recent session, validating the price rebound. However, the volume-to-price ratio (V/P) of 0.0016 is lower than the 14-day average (0.0023), suggesting the rally may lack immediate follow-through. Sustained volume above 3 million shares would strengthen the bullish case.

Relative Strength Index (RSI)

The 14-day RSI stands at 68.2, nearing overbought territory. While this does not trigger a sell signal, it cautions against aggressive long positions. A close above 70 would confirm overbought conditions, potentially leading to a corrective pullback. Conversely, a drop below 60 could signal resumption of the uptrend.

Fibonacci Retracement

Applying Fibonacci levels to the recent high ($200.64) and low ($179.01) identifies key retracement levels at $194.82 (23.6%), $189.94 (38.2%), and $185.06 (50%). A breakdown below $189.94 could trigger a test of $179.01, while a retest of $194.82 may act as a critical support-turned-resistance.

Backtest Hypothesis

A hypothetical backtest strategy could involve entering long positions when RSI dips below 30 and exiting when it exceeds 70, with stop-losses placed below key Fibonacci levels. Given the current RSI of 68.2 and the price near the upper Bollinger Band, this strategy would likely trigger a sell signal. However, the bullish engulfing pattern and strong volume on the most recent session suggest the strategy may need a 5–7-day lookback period to filter false signals. Integrating moving average crossovers (e.g., 50-day above 200-day) could enhance the strategy's robustness by aligning with the broader trend.