Dell Shares Surge 3.51% on Bullish Engulfing Pattern as Technical Analysis Flags Overbought Indicators and Mixed Momentum

Dell Technologies (DELL) has surged 3.51% in the most recent session, extending a 7.20% rebound over two days. This momentum warrants a multi-faceted technical analysis to assess its sustainability.

Candlestick Theory

Recent price action shows a bullish engulfing pattern on October 7, 2025, where the closing price ($150.87) surpassed the prior day’s range, suggesting strong buying pressure. Key support levels emerge at $134.05 (September 30) and $121.29 (September 9), while resistance aligns with the 2025 peak of $154.70 (October 2). A breakdown below $134.05 could trigger a retest of the $121.29 level, but the current bullish engulfing formation may indicate a short-term reversal.

Moving Average Theory

The 50-day moving average ($139.85) is above the 200-day ($127.14), confirming a medium-term uptrend. However, the 100-day ($136.45) sits between these, suggesting a potential consolidation phase. DELL’s current price ($150.87) is above all three, reinforcing bullish momentum. A close below the 50-day average would signal weakening, while a break above $154.70 (the October 2 high) could extend the trend.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line on October 7, 2025, indicating growing momentum. The stochastic oscillator (KDJ) shows K ($150.87) above D ($149.68), with both lines rising, suggesting overbought conditions. However, the RSI (not yet at 70) and MACD alignment may delay a correction, creating a confluence of bullish signals.

Bollinger Bands

Volatility has expanded, with the upper band at $154.70 and the lower band at $134.05. DELL’s price ($150.87) is near the upper band, signaling overbought territory. A pullback toward the middle band ($144.40) is probable, but the recent bullish engulfing pattern may delay this. Band contraction in late September suggests a period of low volatility prior to the recent breakout.

Volume-Price Relationship

Trading volume spiked on October 7 (18.68 million shares) and October 6 (10.45 million shares), exceeding the 30-day average of 8.5 million. This supports the validity of the recent price surge. However, the volume on October 3 (6.53 million) during a 4.50% drop suggests weak bearish conviction. The current volume-price alignment strengthens the case for continued momentum.

Relative Strength Index (RSI)

The 14-day RSI stands at 62, below the overbought threshold of 70. While not extreme, the upward slope of the RSI aligns with the MACD and stochastic oscillator, indicating sustained buying interest. A close above 70 would trigger caution, but the current level supports further gains unless volume wanes.

Fibonacci Retracement

A key Fibonacci level at $144.40 (38.2% retracement of the $121.29–$154.70 range) acts as immediate support. A break below this would target $134.05 (61.8% level), with $121.29 as the final hurdle. The 23.6% retracement at $149.68 coincides with the October 1 high, which may delay a correction.

Backtest Hypothesis

The proposed strategy of buying DELL on Bullish Engulfing patterns and holding for five days, based on historical data from 2022–2025, yielded a -17.37% return versus the S&P 500’s 37.69%. This underperformance aligns with the current technical analysis: while the recent Bullish Engulfing pattern suggests a short-term reversal, the overbought RSI and Bollinger Bands near the upper edge imply a probable pullback. The strategy’s failure likely stems from relying solely on a single pattern without incorporating confluence with moving averages or volume. Integrating these factors—such as confirming the pattern with a break above the 50-day MA and sustained volume—might improve outcomes.

Conclusion

DELL’s technical setup presents a mixed picture. The bullish engulfing pattern and strong volume validate the recent rally, but overbought indicators (RSI, Bollinger Bands) and divergences in the KDJ oscillator suggest caution. A break above $154.70 could extend the uptrend, while a close below $144.40 would invite a retest of $134.05. The backtest results underscore the need for multi-indicator alignment and risk management in pattern-based strategies.