Devon Energy Rallies 3.92% on Bullish Pattern and Golden Cross, Faces Overbought RSI and Key Resistance

Devon Energy (DVN) has surged 3.92% in the most recent session, marking two consecutive days of gains with a 4.21% cumulative rise. This upward momentum, coupled with a recent pullback to $32.485, suggests potential short-term support and resistance zones. The price action indicates a possible bullish continuation pattern, but caution is warranted due to the stock’s volatility over the past year.

Candlestick Theory

Recent price action reveals a bullish engulfing pattern on November 7, 2025, where a large white candle closed at $33.7, surpassing the prior session’s range. This suggests short-term strength, but the lack of a decisive break above $33.73 (the November 4 high) indicates hesitation. Key support levels are identified at $32.485 (November 4 low) and $32.01 (October 30 close), with resistance at $33.73 and $34.03 (October 10 high). A breakdown below $32.485 could trigger a test of the $31.91–$31.93 range (October 17–20 lows).

Moving Average Theory

The 50-day moving average (approximately $33.2–$33.5) currently sits above the 200-day MA ($32.5–$32.8), forming a bullish "Golden Cross" configuration. However, the 100-day MA ($33.0–$33.3) aligns closely with the 50-day, suggesting a narrowing of medium-term trends. Short-term momentum, as seen in the recent rally, appears to outpace long-term averages, but the 200-day MA could act as a critical support zone if the rally stalls.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence, with a narrowing bearish divergence in the past week, hinting at weakening downward momentum. The KDJ stochastic oscillator, however, indicates overbought conditions (K-line above 80), with a potential reversal risk if the %D line fails to cross above the %K line. This divergence between MACD and KDJ suggests caution: while trend strength is intact, overbought levels may precede a pullback.

Bollinger Bands

Volatility has expanded recently, with the bands widening to a 1.2% range. The current price of $33.7 sits near the upper band, indicating overbought conditions. A break above $33.73 could trigger a continuation of the upward trend, but a retest of the lower band ($32.485) would validate the band as a dynamic support/resistance level.

Volume-Price Relationship

Trading volume spiked on November 7 (9.9M shares) during the 3.92% rally, confirming the move’s strength. However, volume has declined in subsequent sessions, suggesting waning conviction. If the price fails to sustain above $33.73 without a corresponding volume surge, it may signal a false breakout.

Relative Strength Index (RSI)

The 14-day RSI has entered overbought territory (>70), aligning with the KDJ indicator. While this does not necessarily signal an immediate reversal, it underscores the need for a pullback to validate the trend’s sustainability. A drop below 60 would indicate weakening momentum, whereas a sustained RSI above 70 could extend the rally.

Fibonacci Retracement

Key Fibonacci levels derived from the October 10 high ($34.03) and the October 17 low ($31.94) include 38.2% at $33.2 and 50% at $33.0. The current price of $33.7 is above the 38.2% retracement level, suggesting that a test of the 61.8% level ($32.6) could occur if the upward trend stalls.

Backtest Hypothesis

The MACD Golden Cross strategy for DVN has shown mixed efficacy, with 50% and 44.44% win rates over 3-day and 10-day periods, respectively. However, the 30-day win rate drops to 50%, indicating inconsistent long-term performance. The maximum return of 1.10% on day 38 aligns with the recent bullish pattern but highlights the strategy’s limited upside potential. Integrating this with the current technical setup, a buy signal would require a confirmed breakout above $33.73 with a surge in volume, while a stop-loss below $32.485 would mitigate downside risk.