Dell Shares Fall 8.48% as Bearish Engulfing Pattern Forms, Technical Indicators Confirm Downtrend

Dell Technologies (DELL) has experienced a sharp correction, with a 3.45% decline on October 10 and a 5.21% drop on October 9, forming a bearish engulfing pattern. Key support levels to monitor include the 200-day moving average (approximately $130) and the $120 psychological level, while resistance remains at the recent high of $164.94. The price has tested the $150.57 level twice, suggesting potential consolidation near this area if buyers emerge.

Candlestick Theory

The recent bearish momentum is reinforced by a two-day breakdown below key support, with a 8.48% loss in two sessions. A hanging man pattern on October 9 and a dark cloud cover on October 8 indicate short-term exhaustion. However, the price has not yet broken the $140 level, which has historically acted as a floor during prior corrections.

Moving Average Theory

The 50-day MA ($145.3) is below both the 100-day ($149.8) and 200-day ($130.1) averages, confirming a bearish trend. The 50-day MA crossing below the 100-day MA in early October marked a death cross, validating the downtrend. The 200-day MA acts as a critical long-term support, with a break below this level likely to trigger a deeper correction toward $110–$120.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line crossing below the signal line (death cross) in mid-October. The KDJ indicator shows %K ($125.8) and %D ($127.3) in oversold territory, but a bearish crossover between the two lines suggests further downside. Divergence between the KDJ and price action (lower highs in %K vs. lower lows in price) may indicate a continuation of the downtrend rather than a reversal.

Bollinger Bands

Volatility has expanded as the price approached the lower band, with the 20-day standard deviation at 6.8%. The current price of $150.57 is near the lower band, suggesting oversold conditions. However, the bands have not shown significant contraction, indicating that volatility remains elevated. A rebound toward the middle band ($145.8) would require a 6.4% rally, which may struggle without a catalyst.

Volume-Price Relationship

Trading volume spiked on October 8 (18.9 million shares) during the 9.05% rebound, but subsequent volume has declined, indicating waning buying interest. The recent 3.45% drop on October 10 occurred with 11.7 million shares traded, suggesting distribution by sellers. Weak volume during rallies (e.g., October 6’s 3.5% gain on 10.5 million shares) further validates the bearish bias.

Relative Strength Index (RSI)

The 14-day RSI is at 29, confirming oversold conditions. However, the RSI has remained below 30 for multiple days, which in a strong downtrend is more indicative of a bear trap than a reversal. A bounce above 35 would be required to alleviate oversold conditions, but this is unlikely without a catalyst.

Fibonacci Retracement

Applying Fibonacci levels between the October 8 high ($166.1) and October 9 low ($155.15), key retracement levels include 38.2% at $160.2 and 50% at $158.1. The price has failed to hold above these levels, suggesting a continuation toward the 61.8% retracement at $155.7. A break below $150.57 would target the $145.3 (200-day MA) and $140 levels.

Backtest Hypothesis

The MACD death cross event on October 10 historically correlates with a 57.14% win rate for DELL over 10 days, despite the bearish signal. This suggests a potential short-to-medium-term rebound, with the 30-day maximum return of 7.18% implying a recovery to $161.5 by late November. However, this scenario depends on volume increasing during rallies and a breakout above the $155.7 Fibonacci level. If the price fails to hold above $150.57, the bearish case remains intact, with targets at $140–$130.