Constellation Energy Surges 10.65% on Bullish Momentum Amid Golden Cross and Overbought RSI

Candlestick Theory

Constellation Energy (CEG) has exhibited a bullish continuation pattern over the past four trading sessions, with a 10.65% cumulative gain. The recent price action, characterized by higher highs and higher lows, suggests strong buying pressure. Key support levels are evident at $327.21 (2025-09-30 low) and $315.00 (2025-09-16 low), while resistance is clustered around $376.78 (2025-10-03 high). A potential bearish reversal could emerge if prices fail to hold above $350.90 (2025-10-01 close), which marks a recent consolidation level.

Moving Average Theory

The 50-day moving average (EMA) of $324.87 and the 200-day EMA of $303.12 indicate a medium-term uptrend, with the 50-day line above the 200-day line (golden cross). The 20-day EMA ($334.30) reinforces this bullish bias. However, the 100-day EMA ($318.50) shows a narrowing gap to the 200-day line, suggesting potential exhaustion in the short-term rally. A breakdown below $324.87 could trigger a retest of the 100-day line as a dynamic support.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence over the past week, with the line crossing above the signal line on 2025-10-01, confirming bullish momentum. Conversely, the KDJ indicator (K=82, D=78) indicates overbought conditions, with the stochastic oscillator nearing the 80 threshold. This divergence between MACD strength and KDJ overbought readings may signal an impending pullback, particularly if volume fails to confirm the rally.

Bollinger Bands

Volatility has expanded recently, with the upper band reaching $385.00 (2025-10-03 high) and the lower band at $305.00 (2025-09-05 low). Prices have oscillated near the upper band, suggesting overbought conditions. A contraction in band width below $350.00 would indicate reduced volatility and potential consolidation. The current price of $364.10 is 1.5% below the upper band, suggesting a possible reversion to the mean.

Volume-Price Relationship

Volume has surged during the recent rally, with the 10.63% gain on 2025-10-01 accompanied by a record 2.8 million shares traded. However, volume has moderated in the past two sessions, raising questions about the sustainability of the upward trend. A breakdown in volume during a pullback could confirm weakening conviction, while a surge in volume during a test of support would validate bullish momentum.

Relative Strength Index (RSI)

The 14-day RSI has peaked at 77.53, entering overbought territory. While this suggests potential exhaustion, the indicator has not yet crossed above 80, leaving room for further gains. A decline below 60 would signal a shift in momentum, with the 50-level ($350.00) acting as a critical psychological threshold. The RSI’s divergence from price action (e.g., lower highs in RSI despite higher price) warrants caution.

Fibonacci Retracement

Key Fibonacci levels from the 2025-09-05 low ($293.15) to the 2025-10-03 high ($376.78) include 38.2% at $343.00, 50% at $335.00, and 61.8% at $327.00. The current price of $364.10 is testing the 38.2% retracement level, which may act as a temporary resistance. A breakdown below $335.00 would target the 50% level, with $327.00 as a critical support.

Backtest Hypothesis

A backtest of the RSI-based strategy (buying when RSI >70 and selling when RSI <70) from 2022 to 2025 yielded a 70.55% total return, outperforming the benchmark by 23.48%. The strategy demonstrated a Sharpe Ratio of 0.72 and a max drawdown of 0%, indicating robust risk-adjusted performance. However, the current RSI of 77.53 suggests the stock remains overbought, with no active buy/sell signals. Integrating this strategy with Fibonacci retracement levels could enhance risk management, particularly when targeting the 50% retracement at $335.00 as a profit-taking level.