Danaher Shares Fall 5.83% in Five Days as Technical Indicators Signal Deepening Downtrend

Danaher (DHR) has experienced a 5.83% decline over five consecutive trading days, closing at $202.46 on the most recent session. This sustained bearish momentum raises questions about potential support levels, trend sustainability, and momentum oscillator signals. Below is a structured analysis of key technical indicators and their implications for DHR’s near-term trajectory.

Candlestick Theory

The recent price action reflects a series of bearish engulfing patterns, with lower highs and lower lows dominating the chart. Key support levels emerge at the $190–$195 range (noted as a prior consolidation zone in early October) and the $185–$190 area (a multi-week pivot from mid-September). Resistance remains fragmented above $205, where the stock has tested but failed to close above on multiple occasions. A breakdown below $190 would validate a deeper correction, aligning with the bearish bias suggested by the 20-day price channel.

Moving Average Theory

Short-term momentum remains bearish, with the 50-day moving average (MA) currently below the 100-day and 200-day MAs, forming a death cross configuration. The 50-day MA at ~$205.50 now acts as a dynamic resistance, while the 200-day MA (~$210) reinforces the downtrend. However, the 100-day MA (~$208) has begun to flatten, suggesting potential exhaustion in the short-term bearish momentum. A retest of the 50-day MA could trigger a temporary bounce if the 200-day MA provides a floor.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line crossing below the signal line in mid-October, confirming a bearish shift. The KDJ oscillator (Stochastic RSI) currently sits in oversold territory (K=20, D=25), which may suggest near-term exhaustion in the downtrend. However, this reading must be interpreted cautiously, as the RSI remains above 30 (see RSI section below), and divergence between KDJ and price action (e.g., lower lows in price vs. higher lows in KDJ) could signal a potential rebound.

Bollinger Bands

Volatility has expanded significantly, with the bands widening to ~$15 width from mid-October to late October. The price has oscillated near the lower band, indicating a high-probability bounce zone between $195 and $200. However, the sustained contraction in volume during this period (e.g., 3.5M–4M shares/day) weakens the reliability of the Bollinger Band squeeze as a breakout signal. A break above the upper band (~$215) would require a surge in volume to confirm trend reversal.

Volume-Price Relationship

Volume has surged during the recent decline, peaking at 11.4M shares on October 1 (a 7.37% rally) and 5.9M shares on October 6 (a 1.53% drop). This divergence between price and volume suggests mixed sentiment: while the downtrend is volume-confirmed, the lack of follow-through selling after the October 1 rally implies short-term exhaustion. A sustained increase in volume above 6M shares/day would be needed to validate any bullish reversal.

Relative Strength Index (RSI)

The 14-day RSI stands at ~28, entering oversold territory but remaining above the critical 30 threshold. Historical data shows the RSI has oscillated between 25 and 70 over the past month, with no clear overbought/oversold extremes. This suggests the downtrend is still in progress, and a rebound to the 35–40 range would signal a temporary pause rather than a reversal. Traders should monitor for a bullish crossover in the RSI (e.g., RSI > 40 with rising volume) as a potential entry signal.

Fibonacci Retracement

Applying Fibonacci levels to the recent $185–$215 range, key retracement levels include 38.2% at ~$199.50 and 61.8% at ~$204.50. The current price (~$202.50) aligns closely with the 61.8% retracement level, which often acts as a temporary support/resistance. A break below 50% (~$198.50) would target the 78.6% level at ~$192.50, while a rebound above 38.2% could test the $208–$210 resistance cluster.

Backtest Hypothesis

The backtest strategy of buying DHR when RSI < 30 and holding for 10 days from 2022 to 2025 yielded a -20.51% return, underperforming the 41.24% benchmark (S&P 500). This poor performance aligns with the technical analysis above: the stock’s bearish trend (lower MAs, bearish MACD, and weak volume) created an environment where oversold conditions did not reliably trigger rebounds. Additionally, RSI rarely dipped below 30 (lowest at ~35 in October), reducing entry opportunities. A modified strategy incorporating Fibonacci levels and volume confirmation (e.g., RSI < 30 + volume spike) might improve results, but the current confluence of bearish indicators suggests continued caution.