Hershey Stock Surges 4.24% On Bullish Engulfing Pattern As Technicals Signal Upside Momentum

Candlestick Theory
The Hershey (HSY) displays a bullish reversal pattern, notably a "Bullish Engulfing" formation observed on July 16–17, 2025. The July 16 session (low: $161.29, close: $164.27) formed a Hammer candle, signaling rejection of lower prices. This was followed by a 4.24% surge on July 17 (close: $171.23), confirming buying momentum. Key resistance is established at $176.85 (July 7 high), while support lies near $161.29 (July 16 low). A sustained break above $172.50 would strengthen the bullish case.
Moving Average Theory
Currently, HSY trades below its 200-day MA ($180.32) and 100-day MA ($169.80), reflecting longer-term bearish pressure. However, the 50-day MA ($166.75) is being tested after the recent rally. The price is now attempting to reclaim the 100-day MA, suggesting short-term bullish momentum. A "Golden Cross" (50-day above 100-day MA) has not yet formed, but convergence between the 50-day and 100-day averages indicates potential trend stabilization if buying persists.
MACD & KDJ Indicators
The MACD histogram has turned positive, with the signal line crossing above the MACD line on July 17, signaling emerging bullish momentum. Concurrently, the KDJ oscillator shows the %K line (78) and %D line (70) in overbought territory, supporting near-term upside. Both indicators align in suggesting upward continuation, though KDJ’s overbought reading warrants monitoring for potential exhaustion. No bearish divergence is evident.
Bollinger Bands
Volatility expanded sharply on July 17 as HSY’s price surged above the upper Bollinger Band ($169.20, 20-day SMA basis), typically indicating strong bullish momentum. The prior contraction phase (July 14–16) resolved with this upside breakout. While such a move often precedes short-term consolidation, the band expansion supports conviction in the breakout if the price holds above $169.20.
Volume-Price Relationship
Volume surged 56% to 2.09 million shares on July 17, validating the 4.24% price gain. This follows above-average volume during the July 10 rally (2.13 million shares), reinforcing accumulation near the $161–$165 support zone. The volume uptick during advances since July 10 signals sustainable buying interest, contrasting with lower volume on down days (e.g., July 15: -1.21% on 1.66 million shares).
Relative Strength Index (RSI)
The 14-day RSI (65) has risen sharply from oversold levels below 30 in mid-July but remains below overbought territory (70). This suggests room for further upside before becoming technically stretched. The swift RSI recovery from oversold aligns with the price rebound, though a break above 70 would necessitate caution for potential pullbacks. No bearish divergence is present.
Fibonacci Retracement
Applying Fibonacci levels to the swing low of $161.29 (July 16) and swing high of $176.85 (July 7), the 61.8% retracement level ($171.00) was decisively breached on July 17 (close: $171.23). This break suggests bullish strength targeting the 78.6% level at $173.50. Confluence exists here as $173.50 aligns with the June 24 high, reinforcing its significance as the next resistance.