Costco Shares Plunge 3.89% as Bearish Signals Converge Below $1050 Resistance

Candlestick Theory
Costco Wholesale exhibits clear bearish momentum following three consecutive down days, culminating in a decisive 3.89% drop to $1010.81. The most recent session formed a long-bodied red candle with a high of $1051.05 and low of $1006.01, indicating strong selling pressure near the $1050 resistance zone. This aligns with the bearish engulfing pattern observed on June 5th, which negated the prior minor gains. Immediate support emerges at $1006 (June 5 low) and $1000 psychological level, while resistance is firmly established between $1050-$1051, reinforced by multiple failed break attempts in early June.
Moving Average Theory
The 50-day moving average (∼$990) has provided dynamic support throughout May, but current price action threatens a breakdown below this level. More critically, the death cross persists—with the 50-day MA below both the 100-day (∼$950) and 200-day (∼$895)—confirming a bearish intermediate trend. Recent rejection near the descending 100-day MA underscores persistent overhead supply. Sustained trade below the 50-day MA may accelerate downside momentum toward the 200-day MA support.
MACD & KDJ Indicators
MACD lines have crossed bearishly below the zero line after the June 5th sell-off, signaling strengthening negative momentum. The histogram shows expanding downward bars, supporting further downside potential. Meanwhile, the KDJ oscillator (%K: 20, %D: 30) resides in oversold territory but lacks a bullish crossover. Divergence is noted: while price made higher highs in early June, KDJ peaked lower—foreshadowing the current correction. Both oscillators align in suggesting continued bearish pressure.
Bollinger Bands
Heightened volatility is evident as the bands rapidly expanded during the June sell-off. Price closed near the lower band ($1006), reflecting intense selling momentum. The breach below the 20-period moving average (mid-band) confirms bearish control. Contraction in late May preceded the sharp directional move, supporting Bollinger’s volatility cycle principles. A close below the lower band would signal potential oversold conditions but requires confirmation from other indicators.
Volume-Price Relationship
The 3.89% decline on June 5th occurred alongside significantly elevated volume (3.28M shares vs. 1.42M prior day), validating bearish conviction. Down days since June 3rd have featured higher volume than up days, confirming distribution. The May 30th rally on substantial volume (5.4M shares) now acts as a support reference near $1002–$1000. Sustained selling volume suggests current weakness may extend.
Relative Strength Index (RSI)
The 14-day RSI (currently 35) breached oversold thresholds briefly during the June 5th sell-off but recovered marginally. While approaching oversold territory (<30), the absence of bullish divergence tempers reversal expectations. Notably, RSI failed to exceed 60 during May-June rallies, reflecting weakening bullish momentum. Its current trajectory suggests room for further downside before reaching extreme oversold levels.
Fibonacci Retracement
Drawing from the March peak ($1077) to May trough ($810), key Fibonacci levels provide critical support targets:
- 38.2% retracement: $995 (converges with 50-day MA)
- 50% retracement: $965
- 61.8% retracement: $935
Current price tests the 38.2% level after failing at the 23.6% resistance ($1050). The $995-$1000 zone represents a major confluence area—breaching this could trigger accelerated declines toward $965.
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Confluence & Divergence Synthesis
Confluent Bearish Signals:
- Breakdown below $1050 resistance (candlestick, MA resistance)
- Volume-validated decline with MACD/KDJ momentum confirmation
- Failed test of 23.6% Fibonacci level ($1050)
- Bollinger Band expansion favoring downside
Notable Divergences:
- KDJ is oversold while RSI remains above 30 (no coordinated oversold signal)
- Price below 50-day MA but longer-term 200-day MA slope remains positive
Outlook:
Costco faces intensified bearish pressure near-term, with critical support at the $995-$1000 Fibonacci/50-day MA confluence. A decisive close below $995 may trigger further declines toward $965. While oversold readings on KDJ hint at potential relief rallies, sustained bullish reversal would require reconquering $1050 resistance with supportive volume. Until broader technical alignment shifts, the burden of proof remains on bulls to defend key support levels.