HP Shares Plunge 4.01% as Death Cross and Bearish Engulfing Pattern Confirm Downtrend

HP (HPQ) has experienced a sharp correction, closing at $23.45 after a 4.01% drop on the most recent session, extending a two-day decline of 5.56%. This price action suggests bearish momentum, with key technical levels and indicator confluence likely to influence near-term directionality.
Candlestick Theory
The recent candlestick pattern indicates a potential bearish continuation. A bearish engulfing pattern formed on December 18, with the body of the candle completely engulfing the previous day’s bullish candle, signaling strong seller control. Additionally, the price has failed to hold above the 24.43 support level (December 17 close), which now acts as a resistance on the way back up. A breakdown below the 23.98 psychological level (December 21 low) could target the 23.49 support (December 15 low), with a failure to hold there potentially extending the decline toward the 22.98 pivot (December 16 low).
Moving Average Theory
The 50-day (24.78), 100-day (26.04), and 200-day (27.13) moving averages all remain above the current price, confirming a bearish trend. The 50-day MA has crossed below the 100-day MA, forming a death cross, which historically signals a downtrend. The 200-day MA acts as a critical long-term resistance, and a sustained close above 27.13 would be necessary to negate the bearish bias. Confluence between the moving averages and Fibonacci retracement levels (discussed later) suggests a high probability of continued weakness until these lines are decisively breached.
MACD & KDJ Indicators
The MACD line (-0.35) has crossed below the signal line (-0.15), with the histogram showing a bearish divergence as the price declines while the histogram widens. This reinforces short-term bearish momentum. The KDJ (Stochastic) indicator shows the J line at 15 and the K line at 25, with the D line at 30, indicating oversold territory. However, the divergence between the J and K lines (J < K) suggests weak buying pressure, reducing the likelihood of a reversal despite the oversold reading.
Bollinger Bands
Volatility has expanded recently, with the upper band at 25.15 and the lower band at 21.75. The price is currently near the lower band, indicating overextended bearish conditions. A bounce off the lower band is probable, but the width of the bands (20-period standard deviation of 1.7) suggests that a contraction could precede a breakout. Traders should monitor for a potential reversal if the price closes above the 24.43 level, which aligns with the upper Bollinger Band on a tighter range.
Volume-Price Relationship
Volume has spiked on recent down sessions, with the December 18 session recording 20.3 million shares traded, a 30% increase from the prior day. This confirms the validity of the price decline. However, the lack of a corresponding volume surge on rallies (e.g., the December 12 up day had only 9.4 million shares) suggests weak buying interest. This asymmetry in volume supports a continuation of the downtrend unless a rally coincides with a sharp volume spike.
Relative Strength Index (RSI)
The 14-period RSI stands at 28, entering oversold territory. While this may indicate a potential rebound, the RSI has remained in oversold conditions for three consecutive days, suggesting exhaustion rather than a reversal. A close above 32 would be necessary to confirm a short-term bottom. However, the RSI’s divergence from the price (RSI forming higher lows while the price makes lower lows) is weak, reducing the reliability of an oversold bounce.
Fibonacci Retracement
Key Fibonacci levels derived from the December 21 high (24.43) and the December 15 low (24.49) show the 50% retracement at 24.46 and the 61.8% level at 24.48. These levels align with the Bollinger Band upper boundary and the 50-day MA, forming a critical cluster. A break below the 38.2% retracement at 24.45 could target the 23.98 level (23.98), with further support at 23.49.

The confluence of bearish candlestick patterns, death cross in moving averages, and oversold RSI with weak divergence suggests a high probability of continued downward pressure. However, the alignment of Fibonacci and Bollinger Band levels near 24.43-24.49 creates a potential short-term support zone. Divergences between MACD and KDJ indicators highlight the risk of a false breakout, while volume patterns underscore the strength of the bearish trend. Traders should prioritize liquidity at 23.98 and 23.49, with a cautionary eye on the 50-day MA as a dynamic resistance.