Circle Tests Key 149 Resistance Amid Bearish Signals And Oversold Divergences

Candlestick Theory
Circle's candlestick patterns reveal heightened volatility and evolving sentiment. The August 15 session formed a bullish engulfing pattern (open: 139.25, close: 149.26), briefly offsetting the prior day’s sharp decline. However, the August 18 candle closed near its low (141.58) after testing resistance at 149.45, forming a bearish continuation signal. Key support is established at the August 14 low of 136.40, while resistance is evident near 149.45–151.47, aligning with the August 18 high and August 15 peak. This price action suggests persistent selling pressure near the $150 psychological barrier.
Moving Average Theory
Circle trades below all major moving averages, confirming a bearish trend structure. The 50-day moving average (approximated near 175–180) and shorter-term 20-day MA (near 155–160) slope downward, reflecting sustained intermediate-term weakness. The inability to reclaim the 50-day MA after July’s breakdown reinforces bearish dominance. Confluence between the 20-day and 50-day MAs near 160–165 now acts as dynamic resistance, with the current price (141.58) indicating no imminent trend reversal.
MACD & KDJ Indicators
MACD shows a bearish configuration, with the MACD line below the signal line and negative histogram values. However, deceleration in histogram downside momentum hints at waning bearish pressure. KDJ oscillators signal oversold conditions, with recent K and D values near 20–25, though August 18’s sell-off prevents a clear bullish crossover. A positive divergence emerges as the August 18 price low (141.35) exceeded August 14’s low (136.40), yet KDJ printed a shallower trough, suggesting weakening downward momentum.
Bollinger Bands
Bollinger Bands expanded during Circle’s June–July volatility, but recent band narrowing indicates reduced volatility. The price tested the lower band on August 14 (136.40) but has since hovered between mid and lower bands. The August 18 close (141.58) near the lower band edge (approximately 140) reinforces immediate oversold conditions. A decisive break below 136.40 may trigger renewed band expansion, while stabilization above 141 could signal consolidation.
Volume-Price Relationship
Volume trends validate bearish momentum. The August 12–14 sell-off occurred on elevated volume (17–33 million shares), confirming distribution. Although August 18’s decline saw reduced volume (8.63 million shares), it followed tepid volume during the August 15 rally, undermining its sustainability. Notably, downside volume consistently exceeds upside volume since July’s peak, reinforcing dominant selling interest and weak conviction in rebounds.
Relative Strength Index (RSI)
Circle’s 14-day RSI, calculated at approximately 32, resides near oversold territory (<30) but lacks a clear reversal signal. Recent RSI readings oscillated between 30–45, avoiding extreme oversold levels despite price deterioration. A modest positive divergence occurred as the August 18 price low surpassed the August 14 low while RSI formed a higher low, hinting at potential stabilization. However, sustained sub-30 RSI readings would be necessary to signal exhaustion.
Fibonacci Retracement
Applying Fibonacci to Circle’s June 23 high (263.45) and August 14 low (136.40), key levels emerge: 23.6% (149.03), 38.2% (156.84), and 50% (163.16). The 23.6% resistance (149.03) capped upside on August 18 (high: 149.45), validating its significance. A break above 149 could target 156.84, while failure here keeps bears in control. The 61.8% retracement (152.07) aligns with the July–August breakdown point, offering secondary resistance. Downside targets reside near the 78.6% retracement (121.80).
Confluence Points
Strong confluence exists near 149–150, combining the 23.6% Fibonacci retracement, candlestick resistance, and the 20-day moving average. Volume exhaustion and RSI near oversold conditions further support this barrier. Downside confluence anchors at 136.40 (August 14 low), backed by Bollinger Band support and the 78.6% Fibonacci level (121.80). A breach below 136.40 would expose 121.80 as the next critical support.
Divergences
Two notable divergences emerged: First, KDJ printed a higher low as Circle’s price made a lower low between August 14 and 18, signaling diminishing bearish momentum. Second, RSI displayed a similar divergence, with August 18’s RSI trough exceeding August 14’s despite a lower price trough. These divergences, while not yet confirmed by price action, suggest non-confirmation of recent lows and a potential stabilization phase.