Celestica Surges 7.11% on Bullish Engulfing Pattern and MACD Crossover Amid Overbought RSI

Celestica (CLS) has exhibited a significant 7.11% surge in the most recent session, with price action and volume dynamics suggesting potential momentum. The candlestick pattern over the past week reveals a bullish engulfing formation on October 13, 2025, where the closing price of $261.06 eclipses the prior bearish candle, indicating a potential reversal from recent volatility. Key support levels are evident at $235.34 (October 6 close) and $221.34 (September 4 close), while resistance is concentrated near $263.90 (October 10 high).

Moving Average Theory

The 50-day moving average (approximately $240–$245) currently sits below the 200-day MA ($235–$240), indicating a mixed trend. However, the 200-day MA appears to be flattening, suggesting potential convergence with the shorter-term average. The price’s recent retest of the 100-day MA ($243–$248) without a decisive break below it implies buyers are defending this critical threshold. A crossover above the 50-day MA would strengthen the case for a sustained bullish trend.

MACD & KDJ Indicators

The MACD histogram has transitioned from negative to positive territory, with the MACD line crossing above the signal line on October 13, 2025, confirming a bullish momentum shift. Conversely, the KDJ oscillator shows a bearish divergence on October 10, where the K line (stochastic momentum) peaked at overbought levels while the price continued to rise, hinting at potential exhaustion. This divergence suggests caution, as overbought conditions (RSI >70) may precede a pullback despite the MACD’s bullish signal.

Bollinger Bands

Volatility has expanded recently, with the upper band reaching $270.15 (October 13 high) and the lower band contracting to $238.64 (October 8 low). The price’s proximity to the upper band ($261.06) indicates overbought territory, but the bands’ expansion suggests heightened volatility rather than a definitive reversal. A sustained break above the upper band could validate a new bullish trend, while a test of the lower band may offer a re-entry opportunity.

Volume-Price Relationship

Trading volume on October 13 surged to 3.29 million shares, the highest in the dataset, confirming the recent rally’s strength. However, volume on October 10 (2.82 million) was relatively muted during a 6.18% decline, suggesting bearish momentum lacked conviction. This contrast implies that buyers are dominating in the short term, but sellers may reemerge if volume fails to sustain above 3 million shares during further advances.

Relative Strength Index (RSI)

The RSI has spiked to overbought levels (>70) on October 13, aligning with the MACD’s bullish signal. Historical data shows the RSI has oscillated between 30 and 70 over the past year, with recent overbought readings occurring in July and August 2025 without immediate reversals. This suggests the current overbought condition may persist if the trend remains intact, but a drop below 50 could signal a bearish correction.

Fibonacci Retracement

Key Fibonacci levels derived from the recent swing high ($270.15, October 13) to low ($233.82, September 30) include 38.2% at $254.00 and 50% at $251.99. The price’s current level ($261.06) is above these retracements, indicating strong bullish momentum. A retest of the 61.8% level ($247.98) would serve as a critical support test, with a break below it invalidating the short-term bullish case.

Backtest Hypothesis

A backtest of a RSI-based strategy (buy at RSI <30, sell at RSI>70) applied to Celestica’s 2022–2025 data reveals two key trades: a buy on March 31, 2025 (RSI=24.87) and sell on July 9, 2025 (RSI=71.79), yielding a +104.2% return. A second trade (April 8, 2022–October 24, 2022) resulted in a -16.0% loss, highlighting the strategy’s sensitivity to market conditions. The net return of +88.2% underscores the strategy’s potential in bullish phases but emphasizes the risk of drawdowns during volatile periods. This aligns with the current RSI overbought condition, suggesting caution for traders relying solely on this oscillator without supplementary filters.