Lam Research's 14.72% 5-Day Rally Gains Steam on Golden Cross and Bullish Technical Signals

Lam Research (LRCX) has surged 2.94% in the most recent session, extending its winning streak to five consecutive days with a cumulative 14.72% gain over five days. The recent price action suggests strong short-term bullish momentum, supported by rising volume and a break above key resistance levels. This performance warrants a detailed technical analysis to assess sustainability and potential reversal points.

Candlestick Theory

The recent candlestick patterns exhibit strong bullish bias, with a series of higher highs and higher lows forming a rising wedge. The most recent session closed near the upper shadow of a bullish engulfing pattern, indicating buying pressure. Key support levels are emerging at the 50-day moving average (calculated at $129.50) and the psychological round number of $130, while resistance is evident at the 200-day moving average ($138.20). A break above $143.71 (the low of October 2, 2025) could signal a continuation of the uptrend, whereas a retest of $128.33 (the low of September 26) may act as a critical support threshold.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average crossing above the 100-day line, forming a "golden cross" that historically signals bullish intent. The 200-day moving average remains in a moderate upward trend, currently at $138.20, but the price has yet to close above this level. The confluence of the 50-day and 100-day lines at $132.50 suggests a potential consolidation zone. If the price stabilizes above this level, it could validate a longer-term bullish trend; a breakdown would likely trigger a retest of the 200-day line.

MACD & KDJ Indicators

The MACD histogram is expanding positively, with the MACD line (12,26) at $2.10 above the signal line, indicating accelerating bullish momentum. The KDJ oscillator shows %K at 82 and %D at 78, suggesting overbought conditions but with %K still above %D, signaling potential continuation rather than immediate reversal. Divergence between price and KDJ indicators is minimal, but a bearish crossover in the KDJ oscillator could act as an early warning of a pullback.

Bollinger Bands

Volatility has expanded significantly, with the price trading near the upper band of the Bollinger Bands (20-period, 2 standard deviations). The bands are widening, which historically precedes a breakout or breakdown. A sustained close above the upper band ($147.35, the high of October 2) would confirm a bullish breakout, while a drop below the lower band ($127.02, the low of September 24) would signal a potential correction. The current position near the upper band aligns with the MACD’s bullish signal, reinforcing the likelihood of a continuation.

Volume-Price Relationship

Trading volume has surged during the recent rally, with the most recent session’s volume (16.4 million shares) exceeding the 30-day average by 40%. This validates the strength of the price action and suggests institutional participation. However, a decoupling of volume and price (e.g., declining volume during a new high) could indicate weakening momentum. The current volume pattern supports the bullish case but warrants monitoring for divergences.

Relative Strength Index (RSI)

The RSI is at 68, approaching overbought territory (70). While this does not necessarily signal a reversal, it highlights the need for caution. A move above 70 would confirm overbought conditions, increasing the probability of a near-term pullback. The RSI has not yet shown bearish divergence, but a closing below 60 would align with the KDJ’s potential bearish crossover and suggest a retest of key support levels.

Fibonacci Retracement

Fibonacci retracement levels drawn from the October 2025 high ($147.35) to the September 2025 low ($126.37) indicate critical levels at 38.2% ($138.00) and 61.8% ($132.00). The current price is approaching the 38.2% retracement level, which could act as a temporary resistance. A break above this level would target the 50% retracement at $134.86, while a failure to hold above $132.00 may trigger a retest of the 61.8% level.

Backtest Hypothesis

The MACD Golden Cross strategy, as described in the provided text, aligns with the current technical setup. A 20-day holding period following a golden cross (50-day above 100-day) would have captured the recent rally, given the confluence of bullish momentum indicators (MACD, KDJ, and Bollinger Bands). The backtest results (102.47% total return vs. 45.43% benchmark) suggest the strategy is robust in LRCX’s context, particularly in a low-volatility environment. However, the absence of a max drawdown in the backtest may reflect the short holding period limiting exposure to downside risks. Integrating this strategy with Fibonacci retracement levels could optimize entry and exit points, capitalizing on confluence between technical indicators and key price levels.