Credo Technology Surges 4.79% on MACD Golden Cross and Fibonacci Bullish Signal

Credo Technology (CRDO) has surged 4.79% in the most recent session, marking a five-day cumulative gain of 8.15%. This sharp rally suggests strong bullish momentum, with price action forming a bullish continuation pattern as the stock tests recent highs. The recent candlestick formations, characterized by long upper wicks and closing near highs, indicate aggressive buying pressure. Key support levels appear to be consolidating around the 160-165 range, while resistance is forming at 175-180, aligning with prior swing highs. A break above 175 could trigger a retest of the 200-day moving average, currently positioned as a dynamic support.

Candlestick Theory

The recent price action shows a series of bullish engulfing patterns and higher highs with expanding range bodies, signaling institutional accumulation. The 160-165 range has acted as a critical support cluster, with price bouncing off this zone on multiple occasions, including a rejection on September 11 (closing at 159.32). A breakdown below this level would target 150-155, but the current momentum suggests a more likely continuation above 175.

Moving Average Theory

The 50-day moving average is currently above the 200-day line, confirming an intermediate-term bullish trend. The 100-day MA has recently crossed above the 200-day MA, reinforcing the uptrend. Price is currently trading above all three moving averages, with the 50-day MA acting as a dynamic support at ~165. A crossover of the 50-day MA above 175 would further validate the bullish bias, while a drop below the 100-day MA (~168) could signal a temporary pullback.

MACD & KDJ Indicators

The MACD histogram has expanded into positive territory, with the MACD line crossing above the signal line on September 10—a classic "golden cross" buy signal. The stochastic oscillator (KDJ) shows overbought conditions (K=85, D=75), suggesting potential exhaustion in the near term. However, the divergence between the RSI and stochastic oscillator (RSI at 68 vs. KDJ at 85) hints at possible overbought consolidation rather than an immediate reversal. A sustained close below the 200-day MA would invalidate the MACD signal.

Bollinger Bands

Volatility has expanded as the bands have widened from a 15-point range to 25 points, with price currently trading near the upper band. This "overbought" position relative to the bands suggests continued upward momentum, but a reversion to the 20-day moving average (within the band) could trigger a temporary consolidation phase. The 165-170 range is critical for maintaining bullish expectations.

Volume-Price Relationship

Trading volume has spiked to multi-month highs, with the recent session’s volume (5.34M shares) exceeding the 50-day average by 35%. This validates the strength of the price rally and suggests institutional participation. However, a divergence in volume—where price makes higher highs but volume declines—could signal weakening momentum. For now, the volume profile aligns with the bullish trend.

RSI Analysis

The 14-period RSI stands at 68, approaching overbought territory but not yet exceeding 70. This suggests the rally has room to extend, though a move above 70 would raise caution about a near-term correction. A drop below 50 would signal a shift in sentiment, but the current RSI trajectory aligns with the MACD’s bullish signal.

Fibonacci Retracement

Key Fibonacci levels derived from the August 5 low (101.22) to the September 18 high (176.7) show 161.8% (175.4) as the next target. The 161.8% level coincides with the 200-day MA, creating a confluence of support. A breakdown below the 61.8% retracement level (~152.5) would invalidate the bullish case.

Backtest Hypothesis

A strategy based on a MACD golden cross with a 10-day holding period demonstrated a 316.76% return, outperforming the benchmark by 41.36%. The high Sharpe ratio (1.13) and zero drawdowns suggest robust risk-adjusted performance, likely due to the confluence of bullish momentum indicators (MACD, RSI) and strong volume. However, this strategy assumes no volatility expansion beyond current levels and relies on the 50-day MA remaining above the 200-day MA—a condition currently intact.