Credo Technology Shares Drop 3.24% as Bearish Candlestick Patterns and Moving Averages Confirm Downtrend

Credo Technology (CRDO) has experienced a 3.24% decline over two consecutive sessions, with the recent close at ¥125.28 marking a continuation of bearish momentum. Candlestick Theory reveals a bearish engulfing pattern on the most recent session, where the body of the candle completely subsumes the prior bullish candle, signaling intensified selling pressure. Key support levels are identified at ¥123.59 (January 30th low) and ¥127.33 (January 26th low), while resistance is evident at ¥129.47 (January 29th close). The formation of a potential bearish harami near ¥133.16 (January 23rd high) suggests a consolidation phase before further downside.
Moving Average Theory indicates a bearish bias across multiple timeframes. The 50-day MA (approx. ¥136.5) and 200-day MA (approx. ¥138.0) are significantly above the current price, confirming a downtrend. The 100-day MA (approx. ¥137.5) further reinforces this, with the price now in a position that may test the 200-day MA as a critical psychological threshold. A crossover of the 50-day MA below the 200-day MA would signal a bearish "death cross," though this scenario remains contingent on sustained weakness.
MACD & KDJ Indicators highlight divergences and potential reversals. The MACD histogram has contracted into negative territory, with the signal line crossing below the MACD line, suggesting declining bullish momentum. The KDJ oscillator shows the stock entering oversold territory (K: 28, D: 25), but a divergence is observed: while the price continues to fall, the stochastic lines are flattening, hinting at a possible near-term bounce. However, this must be validated by a close above the 10-period moving average.
Bollinger Bands reflect a period of contraction between January 22nd and 29th, followed by a sharp expansion as the price broke below the lower band. This "breakout" to the downside indicates heightened volatility and a high probability of continuation of the current trend. The current price position near the lower band suggests the stock is trading at a level where volatility is likely to persist, with potential for further declines until the bands widen again.
Volume-Price Relationship analysis reveals a surge in trading volume during the recent selloff (6.76 million shares on January 30th), validating the strength of the downward move. However, volume has not yet reached multi-month highs seen in late December (16.85 million on December 2nd), suggesting the bearish momentum, while strong, is not yet at exhaustion. A sustained volume spike above 10 million shares could signal a short-term bottoming process.
RSI Calculation confirms oversold conditions, with the 14-period RSI at 28. Historical context shows the RSI has frequently bounced from the 30 level in the past month, indicating potential for a short-covering rally. However, a close below 20 would trigger a deeper oversold warning, though this scenario is less probable given the confluence of bearish technicals. Traders should monitor for a "RSI divergence" where the indicator turns up before the price, which could precede a reversal.
Fibonacci Retracement levels drawn from the December 2nd high (¥213.80) to the January 30th low (¥123.59) highlight critical thresholds. The 61.8% retracement level at ¥135.03 is currently acting as a dynamic resistance. A breakdown below the 38.2% level at ¥148.19 would target the 50% level at ¥155.20, though the current price is far from this range. The 23.6% level at ¥162.93 remains a distant psychological barrier.

Confluence and Divergences

The strongest confluence of bearish signals occurs at the intersection of candlestick patterns, moving averages, and Bollinger Bands. The bearish engulfing pattern, combined with price below all key MAs and proximity to the lower Bollinger Band, suggests a high probability of continued weakness. However, the KDJ oscillator’s oversold condition and potential RSI divergence introduce a caveat: while the trend is bearish, a countertrend rally cannot be ruled out if the RSI stabilizes above 30. Divergences between volume and price action—such as declining volume during the most recent drop—should be monitored for signs of weakening bearish conviction.