Cloudflare Dips 0.96% Amid Technical Resistance At $174.50

Cloudflare (NET) declined 0.96% in the most recent trading session, closing at $170.92 after trading between $170.62 and $174.49. This movement occurred alongside a trading volume of 2.29 million shares, slightly below recent averages. The following technical analysis evaluates the stock's trajectory through multiple frameworks.
Candlestick Theory
Recent candlestick patterns reveal a bearish hesitation following a strong uptrend. The June 4 session formed a bearish engulfing candle, erasing gains from the preceding two bullish sessions (June 2-3). This pattern near the $174.50 resistance level—tested multiple times in early June and previously in February—suggests selling pressure at this psychological barrier. Immediate support rests at $170.62 (June 4 low), with stronger demand emerging near $162.27 (June 2 low) and the $157.40 area (late-May consolidation zone). A sustained break below $170.62 could signal short-term weakness, while reclaiming $174.50 may reignite bullish momentum.
Moving Average Theory
Cloudflare's moving averages confirm a bullish long-term structure. The 50-day SMA (approx. $158) has consistently guided price action since mid-April, with the current price trading comfortably above it. Crucially, the 50-day SMA maintains position above the 100-day SMA ($144) and 200-day SMA ($130), forming a golden cross indicative of sustained upward momentum. The current price holding above all three key averages—especially after the February-to-April correction tested the 200-day SMA—suggests the primary uptrend remains intact. However, convergence between the 50-day SMA and price could signal a near-term consolidation phase.
MACD & KDJ Indicators
MACD metrics show bullish alignment but with waning momentum. The MACD line remains above the signal line in positive territory, confirming the uptrend. However, the histogram has been contracting since late May, suggesting decelerating buying pressure despite higher prices—a mild negative divergence. Concurrently, the KDJ oscillator presents caution: The %K line (76) recently crossed below the %D line (82) from overbought territory (both above 80 in late May). This inflection points to potential near-term exhaustion, though the absence of deep oversold readings tempers bearish implications. Collective oscillator signals imply consolidation rather than a reversal, with bullish bias requiring confirmation through renewed MACD expansion.
Bollinger Bands
Volatility dynamics via Bollinger Bands highlight near-term tension. The price hovers near the upper band ($176), having breached it briefly intraday on June 3-4 before closing within the bands. This rejection aligns with the Bollinger Band Width contraction since mid-May, indicating reduced volatility that typically precedes directional resolution. The midline ($165) now serves as dynamic support. A compression break above the upper band with volume support could propel further gains, while a retreat to the midline would suggest a consolidation phase within the bands’ ascending channel.
Volume-Price Relationship
Volume analysis provides mixed signals. The recent decline on June 4 saw lower volume (2.29M shares) than the preceding advance (2.72M on June 3 and 2.69M on June 2), suggesting limited conviction in the pullback. However, distribution signs emerge when observing May rallies: Notably, the May 16 and May 30 upswings occurred on elevated volume (5.37M and 3.89M shares, respectively), while subsequent consolidations saw diminishing volumes. This divergence indicates robust accumulation during breakouts but weakening follow-through near resistance. For sustainability, advances need volume expansion beyond the 3M-share threshold.
Relative Strength Index (RSI)
The 14-day RSI reading of 79.5 (approximated via 14-day exponential smoothing) demonstrates overbought conditions, having oscillated above 70 since late May. This persistence near extreme levels underscores strong momentum but historically precedes pullbacks or consolidations in NET. Historical RSI divergences during January and March highs (where price highs met declining RSI peaks) are absent in the current rally. However, the indicator’s elevation alongside recent candle patterns suggests vulnerability to profit-taking. Traders should monitor RSI retreats below 70 for trend health confirmation.
Fibonacci Retracement
Fibonacci levels derived from the $102.11 (April 21 low) to $174.49 (June 4 high) surge provide critical support zones. The 23.6% retracement ($157.40) aligns with the May consolidation zone and the 50-day SMA—reinforcing its technical significance. Deeper support emerges at the 38.2% level ($146.84), which coincides with the 100-day SMA and April’s breakout point. Confluence at $157.40-$158.00 represents a high-probability reversal area should a retracement unfold. The current price holding above the 23.6% level preserves near-term bullish structure, while a breakdown below $146.84 would challenge the broader uptrend.
Confluence and Divergence
Key confluence exists at $157.40-$158.00, where the 23.6% Fibonacci retracement, 50-day SMA, and horizontal support merge—establishing a pivotal defense zone. Additionally, the 100-day SMA ($144) intersects with the 38.2% Fibonacci level ($146.84), creating secondary support. Notable divergence appears in the MACD histogram’s contraction despite the price testing YTD highs, indicating weakening upward momentum. Similarly, the elevated RSI contrasts with mixed volume signals near resistance. These divergences recommend vigilance for consolidation but lack reversal confirmation given the moving averages’ bullish alignment and shallow Fibonacci retracement depths.