Elevance Health Plunges 19.6% to Yearly Low Amid Extreme Bearish Momentum

Candlestick Theory
Elevance Health's recent price action reveals extreme bearish momentum, with the latest two sessions forming consecutive long red candles. The July 17 candle opened near its high of $334 and closed near its low of $302.45, indicating intense selling pressure. On July 18, the stock gapped down and established a new yearly low at $276.41, closing at $277.09. This breakdown suggests unresolved downward momentum, with no immediate support visible on the one-year chart. Resistance now emerges at $293.31 (July 18 high), while psychological resistance at $300 may be tested on any rebound. The absence of reversal patterns like hammers or engulfing signals near the current levels implies continued vulnerability.
Moving Average Theory
The moving average configuration underscores a steepening downtrend. The 50-day SMA ($365), 100-day SMA ($390), and 200-day SMA ($415) are all in sharp decline, with the shorter-term averages accelerating below longer-term ones—a hallmark of bearish alignment. Notably, the current price ($277.09) trades 35% below the 200-day SMA, reflecting severe deviation. Such extreme separation may invite short-term mean reversion, but sustained recovery would require reconquering the 50-day SMA, which appears improbable given recent velocity. Death crosses (50-day crossing below 200-day) are now firmly entrenched.
MACD & KDJ Indicators
The MACD histogram shows deepening negative values, with both the MACD line and signal line plunging further into bearish territory. This acceleration aligns with the price collapse, reflecting intensifying downward momentum. Meanwhile, the KDJ indicator signals extreme oversold conditions: %K (8.2) and %D (11.5) are deeply submerged below 20, though yet to show bullish divergence. The KDJ oversold reading must be interpreted cautiously; while typically suggesting exhaustion, it may persist during capitulation phases like the current one. Absence of %K/%D crossover or divergence advises against anticipating immediate reversal.
Bollinger Bands
Volatility has expanded dramatically, with Bollinger Bands widening to their maximum spread in a year as prices breached the lower band. The July 18 close ($277.09) sits 2.8 standard deviations below the 20-day SMA ($340), representing a statistically extreme outlier. Such band violations often precede short-term bounces, but the band expansion itself confirms high momentum selling. A reversion toward the lower band ($285) could offer minimal resistance, while the middle band ($340) now looms as distant resistance.
Volume-Price Relationship
Volume patterns validate the bearish breakout. Trading volume surged to 8.37 million shares on July 18—35% above the 30-day average—following 7.41 million shares on July 17. This two-day volume surge alongside a 19.6% collapse constitutes a high-convidence distribution signal. Notably, July 18’s volume was the highest since October 2024, coinciding with prior breakdowns. Such elevated selling pressure confirms institutional participation in the downturn, reducing likelihood of swift recovery without volume-supported accumulation.
Relative Strength Index (RSI)
The 14-day RSI reads 18.7, penetrating deeply into oversold territory (<30). This reading, derived from the formula RSI = [Average Gain / (Average Gain + Average Loss)] × 100, reflects extreme downside momentum, with losses dominating recent sessions. However, RSI readings below 20 are historically rare and suggest potential for technical rebounds. That said, RSI can remain oversold during crashes, and until divergence forms (e.g., higher low in RSI against lower low in price), it merely warns of stretched conditions rather than signaling reversal.
Fibonacci Retracement
Applying Fibonacci retracement to the recent impulse decline—from the July 1 peak ($400.53) to the July 18 low ($276.41)—identifies potential recovery levels. The 23.6% retracement sits at $305.70, while the 38.2% level resides at $323.82. These thresholds align with overhead congestion zones (e.g., July 17 low at $296.39). Invalidation of the downtrend would require clearance of the 61.8% level ($353.16). Longer-term Fib projections from the 2024 high ($567.26) to current lows suggest more formidable barriers at $387.50 (38.2%) and $422 (50%).
Confluence and Divergence
Strong confluence appears in oversold signals across indicators: RSI (18.7), KDJ (%K<10), and Bollinger Band violations collectively scream capitulation. Volume confirms breakdown legitimacy. However, critical divergence is absent; momentum oscillators align with new lows rather than showing bullish deviations. The nearest Fibonacci and psychological support ($275-$270) remains uncharted territory. While oversold metrics hint at technical rebounds toward $293–$305, sustained recovery necessitates reclaiming the 23.6% Fib level ($305.70) with supportive volume—otherwise, residual selling pressure may dominate.