Li Auto's 3.79% Surge Sparks Bullish Pattern as 50/100-Day MA Crossover, Overbought Indicators Signal Caution

Candlestick Theory

Li Auto’s recent price action shows a 3.79% surge on 2025-08-13, forming a bullish engulfing pattern amid a consolidation phase. Key support levels appear at $23.76 (2025-08-12) and $24.105 (2025-08-06), with resistance clustering near $24.96 (2025-08-08) and $25.59 (2025-08-05). The recent rally suggests a potential breakout above the 200-day moving average, but bearish divergence in the RSI and KDJ indicators (discussed later) may temper optimism.

Moving Average Theory

Short-term momentum is mixed: the 50-day MA ($24.35) crosses above the 100-day MA ($24.12), signaling a bullish crossover. However, the 200-day MA ($24.00) remains a critical hurdle. Price is currently above the 200-day MA, suggesting a medium-term uptrend, but recent volatility (e.g., the 6.20% drop on 2025-07-29) indicates potential retracement risks. Confluence between the 50-day/100-day crossovers and bullish candlestick patterns strengthens the case for a short-term rally.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, reinforcing bullish momentum. However, the KDJ indicator shows overbought conditions (K=85, D=78), suggesting a near-term correction. Divergence between MACD’s bullish signal and KDJ’s overbought warning highlights a risk of a false breakout. Traders should monitor for a bearish KDJ crossover to confirm potential reversals.

Bollinger Bands

Volatility has expanded recently, with the 20-day band width at 15.2% (vs. 10.5% historically). Price is currently near the upper band ($24.96), indicating overbought conditions. A contraction in band width during the 2025-07-22 to 2025-07-23 period preceded a sharp pullback, suggesting a similar pattern may repeat. A break below the middle band ($24.50) could trigger renewed bearish pressure.

Volume-Price Relationship

The recent 3.79% gain on 2025-08-13 saw above-average volume (5.56M shares), validating the move. However, volume has declined in subsequent sessions (e.g., 2.35M on 2025-08-08), raising questions about sustainability. Divergence between rising prices and declining volume during the 2025-08-06 to 2025-08-08 rally suggests weakening conviction.

Relative Strength Index (RSI)

The RSI (14-day) is at 62, trending upward but not yet overbought. A move above 65 would signal caution, with 70 as a critical threshold. Historical data shows the RSI frequently hitting overbought levels (e.g., 75 on 2025-07-17) followed by sharp corrections. Traders should watch for RSI divergence (e.g., price highs vs. RSI lows) to anticipate reversals.

Fibonacci Retracement

Key retracement levels from the 2025-07-29 low ($24.58) to the 2025-08-13 high ($24.96) include 38.2% ($24.76) and 61.8% ($24.63). Price is currently testing the 38.2% level, with a break above confirming bullish momentum. A failure to hold 61.8% could trigger a retest of the 50% level ($24.50), aligning with Bollinger Band support.

Backtest Hypothesis

A strategy of buying stocks with RSI over 70 and holding until RSI falls below 70 yielded -11.35% returns for Li Auto, underperforming the benchmark’s 45.50%. This aligns with the KDJ and Bollinger Band analyses, which highlight overbought conditions without sufficient follow-through. The negative Sharpe ratio (-0.05) and zero maximum drawdown suggest the strategy failed to account for broader trend strength and volatility patterns. Integrating moving average crossovers and Fibonacci retracements could refine entry/exit points, but the RSI-based approach alone remains flawed in this context.