Diamondback Energy Slumps 3.65% As Technicals Signal Bearish Continuation

Diamondback Energy (FANG) declined 3.65% in the latest session, closing at $136.84 with a trading range of $136.20–$141.48. This analysis examines key technical indicators to assess the stock's current position and potential trajectory.
Candlestick Theory
Recent sessions show a bearish confirmation pattern. The August 11 candle closed near its low after penetrating the July 15 swing low of $137.84, indicating breakdown validation. The preceding three candles formed lower highs and lower lows, culminating in a decisive down candle with a long upper wick on August 7 (high: $147.70), reflecting rejected recovery attempts. Critical support now rests at $136.20 (August 11 low), while overhead resistance consolidates near $142.50–$144.36, aligning with the August 4–6 consolidation zone. A close below $136.20 may accelerate selling pressure.
Moving Average Theory
The 50-day MA ($143.20) crossed below the 100-day MA ($145.80) in early August, confirming a bearish near-term structure. Price currently trades 4.4% below the 50-day MA. Meanwhile, the 200-day MA ($152.30) maintains a downward slope, reinforcing the primary downtrend. The expanding gap between short-term (50/100-day) and long-term (200-day) averages signals sustained bearish momentum, with the 200-day MA capping recovery attempts since June. Confluence resistance appears at $143–$145 where the 50-day and 100-day MAs converge.
MACD & KDJ Indicators
MACD (12,26,9) shows sustained bearish momentum, with the histogram deepening negative territory since late July. The signal line divergence from the MACD line expanded to 2.1 points, the widest gap since April’s downturn. KDJ corroborates oversold conditions but without reversal signals: %K (15) and %D (22) are compressed near 20-week lows. However, %J remains negative (-19), suggesting persistent downward inertia. Neither indicator shows bullish divergence despite the oversold readings, hinting at continuation risks.
Bollinger Bands
Bollinger Band width expanded 28% over the past week, reflecting volatility surge during the breakdown. Price breaches the lower band ($138.40) for the first time since April, historically a precursor to short-term rebounds. However, the close below the lower band combined with expanding volatility suggests potential overshoot risk. A mean-reversion toward the 20-day SMA ($141.80) is plausible if buyers emerge, though the lower band must hold to prevent acceleration.
Volume-Price Relationship
Distribution patterns dominate, with August 5 and August 11 down days registering 18% and 15% above-average volume respectively, confirming sell-side conviction. The July 29 rally to $152.50 occurred on 12% below-average volume, highlighting weak upside participation. Notably, August 11’s volume spike during the breakdown exceeded the prior three up-day volumes, underscoring bearish control. Sustained closes below $137 on elevated volume would validate bearish volume accumulation.
Relative Strength Index (RSI)
The 14-day RSI sits at 29.5, technically oversold but exhibiting negative divergence: price broke July’s low while RSI printed a higher low. While this typically signals slowing momentum, similar configurations preceded the April selloff. Historical tendencies show RSI can linger below 30 during strong downtrends. A rebound above 40 is necessary to signal exhaustion; failure to hold 30 may trigger accelerated declines given the sector’s volatility.
Fibonacci Retracement
Applying Fib levels to the major June-July swing (high: $154.91, low: $136.35) reveals critical thresholds. The recent breakdown below the 38.2% retracement ($142.80) and 50% level ($139.60) targeted the 61.8% zone at $136.45. With price probing this level, it represents a pivotal support confluence. A sustained break below $136.35 projects full retracement to $127.60. Conversely, reclaiming $139.60 could trigger short-covering toward $142.80 resistance, aligning with the 50-day MA.
Confluence and Divergence Observations
Confluence supports the bearish thesis: the breakdown below $137.84 (swing low), 50% Fib, and Bollinger lower band coincided with bearish MA alignment and volume-backed distribution. A notable divergence exists between oversold oscillators (RSI/KDJ) and sustained bearish price action, warning against premature reversal assumptions. The $136.20–$136.45 zone (psychological support + 61.8% Fib) remains the critical pivot, with sustained trades below potentially targeting $127–$130, while recovery requires reconquering $139.60 to invalidate immediate downside.