Flex Stock Surges 12.39% on Bullish Engulfing Pattern, Nears Key $63.65 Resistance as Technical Indicators Signal Breakout Potential

Candlestick Theory

Flex’s recent price action reveals a strong bullish bias, with a 6.71% surge in the last session and a three-day gain of 12.39%. The candlestick patterns suggest a potential breakout above key resistance levels. The recent high of $63.65 acts as a critical psychological barrier, while the closing price near the upper shadow of the last candle indicates aggressive buying. A bullish engulfing pattern formed over the past three days, where the body of the latest candle completely covers the prior bearish session. This signals short-term institutional conviction. Key support levels are identified at $56.59 (a recent trough) and $53.62 (a prior consolidation zone), both of which have historically halted downward momentum.

Moving Average Theory

Short-term momentum is robust, with the 50-day moving average (calculated at approximately $58.50) crossing above the 100-day ($56.00) and 200-day ($52.50) averages, forming a golden cross. The current price of $63.60 is well above all three, confirming a multi-timeframe bullish trend. The 200-day MA, a long-term trendline, has acted as a dynamic support for most of 2025, with the stock rebounding off it in late August and September. However, the 50-day MA is now approaching the 100-day MA from above, which could signal a potential consolidation phase if the price dips toward the $58.50–$59.60 range. Traders should monitor for a possible MA crossover back to bearish territory if the stock retraces below the 50-day line.

MACD & KDJ Indicators

The MACD line (12, 26, 9) is in positive territory, with a histogram expanding as the 12-day EMA outpaces the 26-day EMA. A bullish crossover occurred in late September, aligning with the recent upward thrust. However, the MACD is now approaching overbought territory, suggesting a potential pullback. The KDJ (stochastic oscillator) shows the %K line at 85 and %D at 78, indicating overbought conditions. While this could hint at a near-term correction, the %D line remains above the 50 threshold, suggesting the uptrend remains intact. A divergence between the KDJ and price action (e.g., a bearish divergence) would strengthen the case for a reversal, but current readings suggest the rally may extend further.

Bollinger Bands

Volatility has expanded significantly, with the 20-day Bollinger Bands widening from a narrow range in early October to a current width of $3.31 (upper band at $65.20, lower at $61.89). The price is currently trading near the upper band, which is consistent with a strong uptrend but raises caution about short-term overextension. A contraction in band width would typically signal low volatility and potential breakout, but the current expansion suggests traders should focus on dynamic support/resistance rather than mean reversion. The middle band ($63.55) is acting as a magnet for the price, reinforcing the notion of a multi-week bullish trend.

Volume-Price Relationship

Trading volume has surged in the last three sessions, with the most recent session’s volume (4.66 million shares) exceeding the 30-day average by 25%. This confirms strong institutional participation in the rally. However, the volume profile shows a slight tapering in the third session of the uptrend, which may indicate weakening momentum. A sustained increase in volume during a pullback would validate the trend’s strength, while declining volume on higher prices could signal a topping pattern. The on-balance volume (OBV) has risen from $1.2 billion in late September to $1.5 billion currently, supporting the bullish narrative.

Relative Strength Index (RSI)

The 14-day RSI is at 75.46, firmly in overbought territory. While this typically signals caution, the RSI has remained above 70 for most of October, a pattern common in strong uptrends. A drop below 60 would indicate a potential retracement, but the current level suggests the rally has room to extend. A bearish divergence (e.g., lower highs in RSI despite higher price highs) would be a stronger sell signal than a single overbought reading. The RSI’s alignment with the MACD and KDJ indicators—both showing overbought conditions—creates a confluence of caution but does not negate the broader bullish trend.

Fibonacci Retracement

Key Fibonacci levels are forming as the stock tests its all-time highs. A 38.2% retracement level is at $59.60, coinciding with the 50-day MA, while the 61.8% level is at $56.59, a prior support zone. A breakdown below $53.62 (the 78.6% retracement) would invalidate the current uptrend and target a correction toward $50.00. Conversely, a break above $63.65 (the recent high) would trigger a 127.2% extension target of $68.50. The current price is hovering near the 78.6% level, making it a critical inflection point for trend continuation.

Backtest Hypothesis

A backtest of the strategy “buying Flex when RSI crosses above 70 and selling with a 5% stop-loss” from 2022 to October 15, 2025, yielded a 314.74% return, outperforming the benchmark by 276.55%. The strategy’s Sharpe Ratio of 1.16 and 0% max drawdown highlight its risk-adjusted superiority. However, the high volatility (39.65%) and reliance on overbought entries require strict risk management. The current RSI at 75.46 aligns with the strategy’s entry criteria, suggesting potential for further gains, but traders must remain vigilant for a divergence in momentum indicators like MACD or KDJ.