Edison International Surges 3.33% as Bullish Engulfing Pattern and MACD Golden Cross Signal Potential Reversal from Downtrend

Candlestick Theory

Edison International’s recent price action exhibits a bullish engulfing pattern on 2025-08-22, where the candle’s body fully covers the previous day’s bearish candle. This suggests a potential reversal from a downtrend, supported by a 3.33% closing gain. Key support levels are identified at $53.81 (2025-08-21 low) and $52.12 (2025-07-31 close), while resistance aligns with the 2025-08-12 high of $56.09. A breakdown below $53.39 (2025-08-21 low) could trigger further bearish momentum, whereas a close above $56.31 (2025-08-14 high) may confirm a bullish breakout.

Moving Average Theory

The 50-day moving average (calculated from the 2025-08-22 close at $55.6) sits at approximately $55.25, while the 100-day and 200-day MAs are at $54.95 and $54.70, respectively. This "rising MAs" configuration indicates a moderate uptrend, with the price currently above all three averages. However, the 50-day MA is flattening, suggesting potential exhaustion in the short-term rally. A cross below the 50-day MA could signal a correction, while a sustained move above the 200-day MA would reinforce a long-term bullish bias.

MACD & KDJ Indicators

The MACD histogram has recently turned positive, with the line crossing above the signal line on 2025-08-22, forming a golden cross that aligns with the bullish engulfing pattern. This supports a short-term bullish bias but requires confirmation via a sustained close above the 200-day MA. The KDJ indicator (Stochastic) shows a reading of 78.3 (K) and 82.1 (D), indicating overbought conditions. While this may suggest a pullback, divergence between K and D (e.g., K declining while D rises) could delay a reversal, highlighting the need for caution in overbought territory.

Bollinger Bands

Volatility has expanded recently, with the 20-period Bollinger Bands widening to $53.10 (lower band) and $58.10 (upper band). The current price of $55.6 sits closer to the lower band, suggesting undervaluation relative to recent volatility. A breakout above the upper band would confirm a bullish momentum surge, while a test of the lower band may trigger a retest of key support levels.

Volume-Price Relationship

The recent 3.33% rally on 2025-08-22 was accompanied by a surge in volume (2.69M shares), exceeding the 5-day average by 15%. This validates the strength of the bullish move. However, declining volume during subsequent consolidation days (e.g., 2025-08-20 and 2025-08-19) indicates waning momentum, suggesting the rally may face resistance at $56.15 (2025-08-18 high).

Relative Strength Index (RSI)

The 14-day RSI stands at 68.2, approaching overbought territory. While this does not confirm a reversal, it signals a potential pullback, especially if the KDJ indicator’s overbought readings persist. A drop below 50 would invalidate the bullish case, whereas a sustained move above 70 could indicate a strong continuation of the uptrend.

Fibonacci Retracement

Drawing retracement levels between the 2024-09-10 high ($86.96) and the 2025-02-13 low ($55.83) reveals critical levels: 38.2% at $68.16, 50% at $61.40, and 61.8% at $54.64. The current price of $55.6 aligns near the 61.8% retracement level, acting as a potential support zone. A break below this level could target the 78.6% retracement at $51.30, while a rebound above $61.40 would validate a deeper bullish scenario.

Backtest Hypothesis

The MACD golden cross strategy for Edison International has historically shown a 64.52% win rate over 3 days but deteriorates to 48.39% and 54.84% over 10 and 30 days, respectively. This aligns with the current analysis, where the MACD golden cross on 2025-08-22 coincides with a bullish engulfing pattern and strong volume. However, the RSI’s proximity to overbought levels and the flattening 50-day MA suggest caution. To enhance the strategy, combining the MACD signal with RSI divergence or Fibonacci support levels could improve risk-adjusted returns. For instance, entering long on a MACD golden cross but exiting upon RSI crossing below 50 or a close below the 61.8% Fibonacci level may mitigate short-term volatility.