Equinor Gains 4.72% on Strong Technical Momentum Amid Bullish Patterns

Equinor (EQNR) has experienced a 3.27% gain over four consecutive trading days, with a cumulative 4.72% rise. This upward momentum suggests potential short-term strength, but technical indicators must be evaluated to assess sustainability and risk.

Candlestick Theory

Recent price action reveals a series of higher highs and higher lows, forming a bullish ascending pattern. Key support levels are identified at $22.89 (October 16 close) and $22.12 (September 26 consolidation), while resistance aligns with the recent peak at $25.54 (September 26). A potential bearish reversal signal emerged on October 16, with a long upper shadow and a rejection at $23.505, suggesting short-term profit-taking. However, the subsequent four-day rally has retested prior resistance, now acting as dynamic support.

Moving Average Theory

The 50-day moving average (DMA) currently sits at ~$24.10, above the 100-DMA (~$23.70) and 200-DMA (~$23.30), indicating a multi-tiered bullish trend. The price has remained above all three averages since late September, with the 50-DMA acting as a critical trendline. A break below $23.21 (October 10 low) could trigger a retest of the 100-DMA, while a sustained move above $25.39 (September 26 high) may confirm a new uptrend.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence in recent days, with the MACD line crossing above the signal line on October 22, reinforcing bullish momentum. The KDJ stochastic oscillator reached overbought territory (K=82, D=78) on October 22, suggesting potential exhaustion. However, the lack of bearish divergence between price and KDJ implies the uptrend may persist for at least another session.

Bollinger Bands

Volatility has expanded since mid-October, with the upper band at ~$24.80 and the lower band at ~$22.20. The current price of $23.97 is positioned near the 20-period Bollinger Band midpoint, indicating neutral pressure. A breakout above the upper band could trigger a volatility-driven rally, while a drop below the lower band would signal a potential correction.

Volume-Price Relationship

Trading volume has surged during the four-day rally, peaking at 6.56 million shares on October 16, which validates the recent strength. However, volume has moderated in the past two sessions, suggesting waning conviction. If the price continues higher without a volume increase, it may indicate a weakening trend.

Relative Strength Index (RSI)

The 14-period RSI stands at ~68, approaching overbought territory. While not yet a sell signal, this level suggests caution. A close above 70 would confirm overbought conditions, increasing the probability of a pullback. Historical data shows RSI frequently exceeding 70 during strong rallies, so a reversal is not guaranteed.

Fibonacci Retracement

Key Fibonacci levels from the September 26 high ($25.54) to the October 16 low ($22.715) include 38.2% at $24.30 and 50% at $24.13. The current price of $23.97 is approaching the 61.8% retracement level ($23.80), which may act as a critical support. A break below this level could target the 78.6% zone at $23.35.

Backtest Hypothesis

The backtest strategy using RSI overbought levels as a sell signal for Equinor yielded poor results, with a 3-day win rate of 44.74% and a maximum return of -0.66%. This underperformance aligns with the observed RSI behavior, where the indicator frequently remains in overbought territory during sustained rallies. The confluence of bullish moving averages and MACD divergence suggests that overbought RSI levels alone are insufficient to predict reversals in this context. Traders may need to integrate additional filters, such as volume contraction or bearish candlestick patterns, to improve the strategy’s efficacy.