Figma (FIG) surges 5.62% amid volatile week key support at $78–$79 resistance near $87.88

Figma (FIG) surged 5.62% in the most recent session, closing at $82.5 after a volatile week marked by a 14.21% intraday gain on August 6 followed by a 13.37% correction the next day. This sharp price action suggests heightened short-term volatility, with key support levels likely forming around the $78–$79 range and resistance near $87.88. The candlestick pattern over the past week—a bearish engulfing candle on August 7 transitioning to a bullish hammer on August 8—indicates potential indecision in the market’s direction.

Candlestick Theory

The recent price action features a notable bearish reversal pattern on August 7, where the closing price ($78.24) fell significantly below the prior day’s high of $91.49, forming a large bearish candle. This is followed by a bullish hammer on August 8, with a narrow body and long lower wick, suggesting buying pressure at lower levels. Key support levels at $78 and $77.8 align with recent lows, while resistance at $82.6 and $87.88 requires validation. The confluence of these levels with the 50-day moving average (calculated at approximately $85.5) suggests a potential short-term consolidation phase.

Moving Average Theory

The 50-day moving average currently sits above the 200-day MA, indicating a short-term bullish bias. The 200-day MA, calculated at around $95, acts as a critical long-term resistance. The price’s recent retest of the 100-day MA ($88.6) failed to break above it, suggesting the 200-day MA may cap further upward movement. If the 50-day MA crosses below the 100-day MA, it could signal a shift in momentum. However, the current position of the price above the 50-day MA supports a continuation of the recent uptrend.

MACD & KDJ Indicators

The MACD line has crossed above the signal line, forming a bullish crossover, while the histogram shows narrowing divergence, indicating waning bearish momentum. The KDJ indicator (stochastic oscillator) is in overbought territory (K at 85, D at 75), aligning with the RSI’s overbought reading of 70. However, the recent 5.62% rally has not been accompanied by a corresponding surge in volume, creating a potential divergence that may signal an overbought correction.

Bollinger Bands

The price closed near the upper Bollinger Band on August 8, reflecting high volatility following the prior week’s sharp swings. The bands have widened significantly, suggesting a potential continuation of the trend or a consolidation phase. If the price retraces below the 20-day MA ($80.5), the lower band may act as dynamic support.

Volume-Price Relationship

Trading volume spiked on August 6 (28.7 million shares) during the 14.21% rally but declined sharply on the subsequent 13.37% drop, indicating weak follow-through for the bearish move. The recent 5.62% gain was supported by above-average volume (8.6 million shares), reinforcing the validity of the rally. However, the lack of volume during the August 5–6 rally to $94 suggests the move may lack sustainability.

Relative Strength Index (RSI)

The RSI is currently at 70, confirming an overbought condition. While this typically signals a potential pullback, historical data shows the price has previously broken out of overbought levels (e.g., the August 1–4 rally to $142.92). A sustained close below 50 would indicate weakening momentum, but the recent rally suggests buyers remain active at current levels.

Fibonacci Retracement

Applying Fibonacci retracement to the August 1–6 rally (from $110.11 to $142.92), the 61.8% retracement level at $94.08 aligns with the August 5 high. The 50% level at $126.52 and 38.2% at $120.15 remain critical resistance targets. A break below the 61.8% retracement may trigger a test of the 50% level.

Backtest Hypothesis

A backtest strategy based on buying Figma when RSI indicates overbought conditions and selling after five days resulted in a 22.22% loss from a $100 investment, underperforming the broader market’s 14.48% gain. This outcome highlights the limitations of using RSI as a standalone trigger in highly volatile stocks. The overbought signal coincided with a period of exhaustion in buying momentum, as evidenced by the divergence between the RSI and declining volume during the August 5–6 rally. Integrating additional filters, such as confirming price action above key moving averages or Bollinger Bands, could mitigate such risks.