Coherent’s 18.32% Surge Extends Two-Day Rally to 23.78% as Technical Analysis Points to Bullish Momentum

Coherent (COHR) has surged 18.32% in the most recent session, extending its two-day rally to 23.78%. The price action reflects strong bullish momentum, with recent volatility and volume dynamics warranting closer examination. Below is a structured analysis of key technical indicators and their implications for the stock’s near-term trajectory.

Candlestick Theory

The recent price action suggests a potential breakout above a critical resistance zone near $132–$134, with the current price at $159.3 forming a bullish continuation pattern. The candlestick structure over the past two weeks includes a series of higher highs and higher lows, indicative of strong institutional buying. Key support levels are identified at $126 (prior swing low) and $105–$107 (congestion zone from late October), while resistance now sits at $162.5 (recent high). A failure to hold above $126 could trigger a retest of earlier support levels, while a sustained break above $162.5 may signal a new uptrend phase.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average (currently around $120–$125), which has crossed above the 100-day (approximately $115) and 200-day ($105–$110) averages, forming a bullish "golden cross" setup. The 200-day MA remains a critical reference point; as long as the price stays above this level, the intermediate-term trend remains intact. However, the 100-day MA has begun to flatten, suggesting potential exhaustion in the short-term rally. A pullback to the 50-day MA could provide a confluence of support if the broader uptrend holds.

MACD & KDJ Indicators

The MACD line has crossed above the signal line, confirming a bullish crossover with a histogram showing increasing positive divergence. This aligns with the KDJ indicator (Stochastic), where %K (80–85) and %D (75–80) suggest the stock is approaching overbought territory. While this may indicate short-term profit-taking, the lack of bearish divergence in volume and price action reduces immediate reversal risk. A close below the 20-period KDJ threshold (e.g., %K < 50) would signal weakening momentum.

Bollinger Bands

Volatility has expanded significantly, with the price trading near the upper Bollinger Band (current upper band ~$160–$165). This contraction-to-expansion pattern suggests heightened bullish pressure, but it also raises overbought concerns. A pullback toward the 20-day moving average (central band) is likely, with the lower band (~$125–$130) offering potential support. The narrowing of the bands in recent sessions suggests a possible consolidation phase ahead.

Volume-Price Relationship

Trading volume has spiked in recent sessions, particularly on the 18.32% rally, validating the move higher. However, the volume profile shows a slight decline in the second day of the rally, which may indicate reduced buying urgency. For the uptrend to sustain, volume should remain above the 10-day average (currently ~10 million shares). A divergence between price and volume—such as a new high with shrinking volume—would raise sustainability concerns.

Relative Strength Index (RSI)

The 14-period RSI has surged to ~80–85, entering overbought territory. While this is a cautionary signal, it is not a sell signal in a strong uptrend. A pullback to the 60–70 range would normalize momentum without invalidating the trend. A close below 50 would suggest a shift in sentiment, particularly if accompanied by bearish candlestick patterns.

Fibonacci Retracement

Key Fibonacci levels derived from the October 2025 low ($85) to the November 2025 high ($162.5) include 61.8% at $125 and 78.6% at $110. The current price action suggests the stock is testing the 38.2% retracement level ($140–$145) as a potential consolidation zone. A break above this level could target the 100% extension at $162.5, while a breakdown would reorient focus to the 61.8% support.

Backtest Hypothesis

A backtest of a MACD golden cross strategy (holding for 10 days) yielded a 55.6% win rate with an average annual return of 10.2%, aligning with the current bullish setup. However, the strategy’s maximum drawdown of 12.5% underscores the need for risk management. Given Coherent’s recent MACD crossover and elevated RSI, a 10-day hold could align with the strategy’s parameters, though the overbought RSI and expanding Bollinger Bands suggest a cautious approach to entry sizing.