Dell Shares Plunge 4.50% as Technical Indicators Signal Deepening Bearish Trend Near Key Support Levels

Dell Technologies (DELL) has experienced a sharp decline in recent trading sessions, with the stock dropping 4.50% on the most recent day and falling 5.97% over the past two days. This downward momentum has pushed the price closer to key support levels, setting the stage for a detailed technical analysis to assess potential reversal points or continuation of the bearish trend.

Candlestick Theory

The recent price action for DELL suggests a bearish bias, with a two-day bearish engulfing pattern forming as the stock closed near its daily lows. Key support levels have emerged around $140.41 (the 10/3 low) and $130.00 (a prior consolidation zone), while resistance remains at $149.68 (the 10/1 high). The formation of a "bearish harami" on October 3, where the body of the candle is contained within the previous session’s range, signals potential exhaustion in the short-term rally. However, the absence of a strong bullish reversal pattern like a "piercing line" suggests continued bearish pressure unless the price breaks above $147.37 (the 10/2 close).

Moving Average Theory

Short-term momentum remains bearish, with the 50-day moving average (calculated at approximately $135.50) crossing below the 200-day MA, forming a death cross. The 10-day MA at $137.00 is also below the 50-day MA, reinforcing the downtrend. However, the 200-day MA ($133.00) appears to act as a dynamic support level, with the price testing this area multiple times in late September. A sustained break below this level could target $120.00, aligning with the 200-day MA from earlier in the year.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the line crossing below the signal line on October 3, confirming bearish momentum. The RSI (KDJ) indicator shows DELL entering oversold territory at 28, suggesting a potential short-term bounce. However, the divergence between the KDJ oscillator (which peaked on September 30) and the price (which continued lower) indicates waning bearish conviction. A bullish crossover in the KDJ could signal a temporary reversal, but confirmation via a break above $147.37 is required to validate this.

Bollinger Bands & Volatility

Bollinger Bands have contracted significantly, with the price hovering near the lower band since October 2, indicating low volatility and a potential breakout scenario. The 20-day standard deviation has narrowed to 3.5%, historically preceding sharp directional moves. If the price breaks above the upper band ($152.00), volatility could expand, but a sustained close below the lower band ($137.00) would reinforce the bearish case.

Volume-Price Relationship

Trading volume has spiked on recent down days, with the October 3 session seeing 6.5 million shares traded—a 50% increase from the previous day. This volume surge validates the bearish move, as it reflects aggressive selling pressure. However, the declining volume on the most recent rally (October 2) suggests weakening follow-through, which could foreshadow a short-term bounce.

RSI Analysis

The RSI has dipped below 30, entering oversold territory, which typically suggests a potential rebound. However, given the strong bearish trend, this could represent a false signal rather than a reversal. A closing above $145.00 would be needed to confirm an RSI-driven bounce, while a sustained move below 25 could indicate a deeper decline.

Fibonacci Retracement

Key Fibonacci levels from the recent high ($149.68 on October 1) to the low ($134.00 on September 29) include 38.2% at $144.00 and 61.8% at $137.00. The price has tested the 61.8% level twice in late September, suggesting this area is critical for near-term direction. A break below $137.00 would target the 78.6% retracement at $128.00, aligning with prior support levels.

Backtest Hypothesis

The MACD death cross observed on October 3 has historically led to mixed short-term performance but a higher win rate over longer periods. While the 3-day win rate is 50%, the 10-day win rate improves to 57.14%, and the 30-day win rate stands at 47.62%. This suggests that while immediate volatility is likely, the probability of a positive return increases over weeks. The maximum return of 7.11% recorded on day 59 post-death cross indicates that strategic entries after a consolidation phase—such as a bounce off the 61.8% Fibonacci level—could offer higher-probability opportunities.