Danaher's 1.53% Decline Sparks Bearish Signals as Candlestick Patterns and Death Cross Confirm Downtrend

Candlestick Theory

Danaher’s recent price action reveals bearish signals, with a 1.53% decline in the most recent session. Key candlestick patterns include bearish engulfing formations (e.g., 2025-09-25 and 2025-10-03) and harami candles (e.g., 2025-09-26), indicating potential short-term reversals. Critical support levels are identified at $210 and $205, with resistance at $215. A descending triangle pattern forms near $210, suggesting a breakdown is likely if the price closes below this level. The recent consolidation around $211–$212 indicates a possible test of the $210 support.

Moving Average Theory

The 50-day MA (currently ~$215), 100-day MA (~$210), and 200-day MA (~$205) show a bearish alignment, with the price below all three. A death cross occurred in mid-October 2025 when the 50-day MA crossed below the 100-day MA, reinforcing the downtrend. However, the convergence of the 100-day and 200-day MAs suggests a potential consolidation phase. If the price stabilizes above $210, the 100-day MA could act as a dynamic support, but a break below $205 would signal further weakness.

MACD & KDJ Indicators

The MACD histogram remains negative, with the line crossing below the signal line in late September 2025, indicating bearish momentum. The KDJ indicator shows overbought conditions (K > 80, D rising), but the J line’s sharp spike suggests a possible near-term reversal. RSI (71.23) aligns with overbought territory, but recent divergence between RSI and price (e.g., lower lows in price vs. higher lows in RSI) raises caution about a false signal. The stochastic oscillator’s overbought position may foreshadow a correction, though the bearish trend remains intact.

Bollinger Bands

Volatility has contracted, with the price hovering near the lower band ($210–$212 range). This compression suggests a potential breakout or breakdown. A break above the upper band ($215) could trigger a short-term rally, but the bearish trend and Fibonacci retracement levels (e.g., 50% at $210.22) make a breakdown more probable. The bands’ narrowing also indicates a low-probability scenario for a trend reversal.

Volume-Price Relationship

Recent declines (e.g., 2025-10-03 and 2025-10-06) occurred on high volume, validating the bearish momentum. However, volume has moderated in the last two sessions, suggesting weakening conviction in the downtrend. A confirmation of further declines would require a surge in volume. Conversely, a surge in volume during a rebound could signal a short-term reversal.

Relative Strength Index (RSI)

RSI (71.23) is in overbought territory, historically indicating a potential pullback. However, in strong trending markets, overbought RSI can persist (e.g., 2025-09-03 to 2025-09-10). The current reading aligns with the backtest strategy’s sell signal, but the confluence of bearish candlesticks and moving averages suggests the overbought condition may not resolve quickly. A move below 70 would confirm a bearish reversal, but this requires a closing break below $210.

Fibonacci Retracement

Key Fibonacci levels from the recent high ($219.92) to low ($185.66) include 61.8% at $204.85 and 50% at $210.22. The price is currently testing the 50% level ($210.22), which acts as a critical resistance. A break above this level would target $204.85, but the bearish bias makes a breakdown more likely. The 38.2% level ($215.00) is a near-term resistance, and a failure to hold above $210.22 would reinforce the downtrend.

Backtest Hypothesis

The backtest of selling Danaher when RSI exceeds 70 (overbought) and holding until RSI exits overbought territory from 2022 to 2025 yielded underwhelming results: a 3.23% strategy return vs. a 47.83% benchmark return, with a -44.61% excess return and a Sharpe Ratio of 0.03. This indicates the strategy underperformed the market while incurring high volatility (25.94%) and no drawdown. The current RSI (71.23) aligns with the sell signal, but historical data suggests this approach may not be reliable in strong trending markets. The confluence of bearish candlesticks, moving averages, and RSI overbought conditions supports the sell signal, but the backtest’s poor risk-adjusted returns highlight the need for caution. Integrating additional indicators (e.g., divergence in RSI or volume confirmation) could improve the strategy’s efficacy.