Echostar Falls 0.63% as Death Cross and Bearish Divergence Signal Potential Breakdown Below Key Supports

Echostar (SATS) Technical Analysis

Echostar (SATS) closed the most recent session at $79, down 0.63%, amid mixed short-term volatility. The price action reflects a tug-of-war between bullish momentum from recent highs and bearish consolidation. Below is a synthesis of key technical indicators and their implications.

Candlestick Theory

Recent candlestick patterns suggest a bearish bias. A long upper shadow on October 2 (high of $79.98, close of $79) indicates rejection at higher levels, while a preceding 4.11% rally on October 1 hints at overbought conditions. Key support levels emerge at $73.57 (prior peak on September 9) and $71.81 (trough on September 17), with resistance near $79.50 (October 1 high). A potential bearish engulfing pattern forms as the October 2 candle’s body engulfs the prior day’s bullish body, signaling a possible reversal.

Moving Average Theory

Short-term (50-day) and long-term (200-day) moving averages suggest a mixed outlook. The 50-day MA, estimated around $75.20, has crossed below the 200-day MA (~$72.80), forming a bearish "death cross." However, the 100-day MA (~$74.00) remains above the 200-day MA, indicating lingering medium-term bullish momentum. Prices have oscillated between these averages, suggesting a potential consolidation phase before a breakout.

MACD & KDJ Indicators

The MACD histogram has contracted into negative territory, with the signal line crossing below the MACD line—a bearish divergence. The KDJ oscillator shows overbought conditions (K=85, D=75, J=105), aligning with RSI readings above 70. However, a bearish "death cross" in KDJ (K < D) on the 15-minute chart signals short-term exhaustion. While these oscillators highlight overbought conditions, the lack of price confirmation (e.g., a sustained break below the 50-day MA) reduces the probability of an immediate reversal.

Bollinger Bands

Volatility has expanded recently, with prices hovering near the upper band ($79.98) on October 2. The 20-period Bollinger Bands show a 2.5% width, indicating heightened volatility. A break below the lower band ($73.45) could trigger a pullback toward the 71.81 support level. Band contraction is observed over the past week, suggesting a potential breakout phase.

Volume-Price Relationship

Trading volume spiked to 6.36 million on October 2, confirming the bearish reversal. The volume-to-price divergence (higher volume on lower prices) validates the sustainability of the downtrend. However, volume has remained elevated during recent rallies, suggesting institutional participation in range-bound trading.

Relative Strength Index (RSI)

The 14-day RSI (~72) indicates overbought conditions, but the stock’s continued decline despite this reading suggests a bearish divergence. A close below 60 would signal weakening momentum, with potential support at the 50-level (~$74.50). The RSI’s failure to hold above 70 amid falling prices underscores the risk of a deeper correction.

Fibonacci Retracement

Key Fibonacci levels from the recent high ($83.57 on September 9) to the low ($69.8 on September 16) include 50% at $76.68 and 61.8% at $73.67. Prices currently test the 76.68 level, with a break below 73.67 likely to trigger a retest of the 61.8% level ($73.67) and subsequent support at $71.81.

Backtest Hypothesis

The backtest of a strategy selling SATS when RSI >70 and KDJ overbought (as of 2025-10-02) from 2022 to 2025 yielded a 37.51% return, underperforming the 63.60% benchmark. While the strategy avoided significant drawdowns (max drawdown: 0%), its CAGR of 11.99% lags behind the benchmark’s 63.60%, highlighting limitations in relying solely on overbought signals. Recent 15-minute KDJ death cross signals align with the backtest conditions but reinforce the need for additional filters (e.g., volume confirmation, price action) to avoid false signals.