Constellation Energy Surges 9.40% on Bullish Technicals Amid Overbought RSI and KDJ Signals

Constellation Energy (CEG) has surged 0.71% in the most recent session, extending its three-day rally by 9.40%. This upward momentum suggests a potential short-term bullish bias, though the cumulative gains require validation through broader technical frameworks to assess sustainability and risk.

Candlestick Theory

The recent price action features a series of higher highs and higher lows, forming a bullish ascending triangle pattern. Key support levels are identified at $329.07 (2025-09-30 low) and $310.16 (2025-08-22 low), while resistance lies at $357.46 (2025-10-02 high) and $358.69 (2025-10-03 low). A breakout above $358.69 could trigger a retest of the $376.78 high from 2025-10-03, but failure to hold above $329.07 may indicate a pullback to the $310.68–$312.52 range.

Moving Average Theory

The 50-day moving average (calculated as $320.50 based on recent data) is currently below the 200-day MA ($332.00), suggesting a bearish intermediate-term trend. However, the 10-day MA ($347.00) has crossed above the 50-day MA, forming a potential golden cross. This short-term bullish crossover aligns with the recent three-day rally but remains inconsistent with the longer-term bearish bias. Traders should monitor whether the 200-day MA becomes a dynamic support level at $332.00.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence, with the line (12.3) rising above the signal line (8.7), indicating strengthening bullish momentum. Conversely, the KDJ indicator is in overbought territory (K=82, D=78), signaling a potential reversal risk. This divergence between momentum indicators—MACD bullish vs. KDJ overbought—suggests caution, as the KDJ overbought condition may precede a near-term correction.

Bollinger Bands

Volatility has expanded, with the upper band at $376.78 and the lower band at $327.21. The current price ($360) is positioned closer to the upper band, suggesting overbought conditions. A contraction in band width (expected if volatility subsides) could precede a directional move, but the price remains within the bands, indicating a continuation of the trend rather than a reversal.

Volume-Price Relationship

Trading volume has surged over the past three days, with the most recent session seeing 3.36 million shares traded. This volume is 50% higher than the 20-day average, validating the price strength. However, a decline in volume during the next rally could signal weakening conviction, suggesting a potential exhaustion of the upward move.

Relative Strength Index (RSI)

The 14-day RSI stands at 75.09, firmly in overbought territory. While this aligns with the bullish momentum, it also raises the risk of a short-term pullback. A drop below 60 would indicate waning momentum, while a move above 80 could extend the overbought condition, increasing the probability of a correction.

Fibonacci Retracement

Applying Fibonacci levels to the recent $329.07–$376.78 range, key retracement levels are at $358.69 (23.6%), $345.43 (38.2%), and $332.00 (50%). The current price ($360) is near the 23.6% retracement level, which has historically acted as a minor resistance. A break above this level could target the 38.2% retracement at $345.43, but a failure to hold above $358.69 may trigger a retest of the 50% level at $332.00.

Backtest Hypothesis

The backtest strategy of buying CEG when RSI exceeds 70 and selling at a 5% profit target (e.g., $378) demonstrated exceptional performance from 2022 to 2025, with a 504.42% return compared to the benchmark’s 45.41%. However, current conditions present mixed signals: the RSI at 75.09 aligns with the buy signal, but the KDJ overbought condition and MACD divergence suggest a higher risk of a near-term reversal. Traders should consider implementing a tight stop-loss below $329.07 to mitigate the risk of a breakdown in the bullish pattern.