Global Payments Surges 5.00% on Bullish Reversal Pattern, Key Resistance Broken

Candlestick Theory

Global Payments (GPN) has exhibited a strong bullish reversal pattern in recent sessions, marked by a 5.00% surge to $90.01 on August 22. This closes above key resistance levels at $86.62 (August 19 high) and $87.19 (August 14 high), suggesting potential continuation of the uptrend. Key support levels are identified at $85.72 (August 21 close) and $85.77 (August 20 low), where prior consolidation occurred. A bearish engulfing pattern on August 20 (close at $85.77) contrasts with the subsequent bullish momentum, indicating a possible breakout scenario. Traders should monitor if the price sustains above $86.62 to confirm a shift in sentiment.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (estimated ~$87.50), which is above both the 100-day (~$86.00) and 200-day (~$85.00) averages, signaling a bullish bias. The 50-day MA crossing above the 200-day MA in recent weeks (a “golden cross”) reinforces the uptrend. However, the 100-day MA lags slightly, suggesting intermediate-term buyers may still be cautious. A break below the 50-day MA could trigger a pullback toward $85.72, while a sustained close above $90.01 may push the 200-day MA upward, solidifying long-term bullishness.

MACD & KDJ Indicators

The MACD (12,26,9) shows a golden cross recently, with the histogram expanding as bullish momentum intensifies. This aligns with the KDJ stochastic oscillator, where the %K line crossed above the %D line near overbought territory (RSI >70). While these signals suggest a continuation of the uptrend, caution is warranted due to the RSI hitting overbought levels (~75) and the KDJ nearing its upper bound. A divergence between price highs and oscillator peaks may signal a near-term reversal, particularly if volume declines.

Bollinger Bands

Volatility has expanded sharply, with the price touching the upper Bollinger Band at $90.635 on August 22. The 20-day moving average (middle band) is currently around $87.50, acting as dynamic support. The band width expansion indicates heightened volatility, often preceding a consolidation phase or a breakout. If the price retests the lower band (~$84.00) with strong volume, it could trigger a rebound. However, a sustained break above the upper band may indicate a new bullish trend phase.

Volume-Price Relationship

Trading volume surged on the August 22 rally, with ~2.33 million shares traded, confirming the bullish breakout. However, volume has been mixed in prior sessions, with a sharp drop on August 20 (2.19 million) before the rebound. This suggests that while institutional buying is evident, retail participation remains fragmented. A sustained increase in volume during an upward move would strengthen the case for continuation, whereas declining volume could hint at waning momentum.

RSI

The RSI (14) is currently in overbought territory (~75), indicating potential exhaustion of the rally. Historically, GPN has shown corrections after RSI breaches 75, with pullbacks averaging 5-7% over 5-7 days. However, in a strong uptrend, RSI can remain overbought for extended periods. Traders should watch for a bearish divergence (lower highs in price with lower highs in RSI) to confirm a reversal.

Fibonacci Retracement

Key Fibonacci levels from the recent low ($77.61, July 15) to high ($90.635, August 22) are:

- 23.6% at ~$86.00

- 38.2% at ~$84.50

- 50% at ~$84.00

- 61.8% at ~$83.00

A retest of the 61.8% level ($83.00) could trigger a bounce, while a breakdown below 50% would signal deeper correction.

Backtest Hypothesis

The strategy of buying GPN on a MACD golden cross combined with RSI overbought conditions (RSI >70) and holding for 5 days yielded a 3.60% return, significantly underperforming the 41.58% benchmark. This -37.98% excess return highlights the limitations of relying solely on confluence between MACD and RSI in a strong uptrend. While the MACD confirmed bullish momentum, the overbought RSI signaled potential exhaustion, leading to premature exits. The strategy’s risk-free profile (0.00% max drawdown) contrasts with its low Sharpe ratio (0.74), underscoring the trade-off between safety and reward. To improve, incorporating Fibonacci retracement levels as dynamic stop-loss targets (e.g., 61.8% at $83.00) or adding volume filters for confirmation could enhance alignment with market structure.