Lumentum Holdings Shares Jump 5.27% Extending Rally to 6.64% as Technical Indicators Signal Bullish Continuation Amid Overbought Conditions

Lumentum Holdings (LITE) has surged 5.27% in the most recent session, extending its two-day rally to 6.64%. This sharp upward momentum, coupled with elevated trading volumes and a series of higher highs and lows, suggests a potential continuation of the bullish trend. Recent price action, particularly the rejection of key support levels like $302.98 (Dec 3) and $316.15 (Dec 16), indicates strong buying pressure. Resistance appears to be forming around $337.13 (Dec 18) and $344.05 (Dec 15), with the current price consolidating near the upper Bollinger Band, signaling heightened volatility.
Candlestick Theory
The recent price action features a "higher high, higher low" structure, suggesting a bullish trend. A potential three-white-soldiers pattern from late December to early January could indicate further upside, though a breakdown below $316.15 may trigger a retest of earlier support. The 38.2% Fibonacci retracement level at $330.50 aligns with recent intraday lows, offering a probable near-term support zone.
Moving Average Theory

The 50-day moving average (approx. $300) is rising, while the 200-day MA (approx. $65) remains well below current levels, confirming a strong uptrend. The 100-day MA ($270) acts as a long-term floor. Confluence between the 50-day MA and Fibonacci retracement levels suggests $330–$335 could be a consolidation zone before the next leg higher.
MACD & KDJ Indicators
The MACD histogram has turned positive, with the fast line crossing above the signal line, indicating growing bullish momentum. However, the KDJ indicator (Stochastic) shows overbought conditions (K=85, D=78), suggesting a potential pullback. Divergence between MACD and KDJ may signal a short-term correction, though the broader uptrend remains intact.
Bollinger Bands
Volatility has expanded, with the stock trading near the upper band, a classic sign of extended momentum. A pullback toward the mid-band ($325) could trigger a reentry for buyers, while a break above the upper band may push the stock toward $345–$350.
Volume-Price Relationship
Trading volumes have spiked during the rally, particularly on the Dec 18 session (3.97M shares), validating the strength of the move. However, if volume tapers while prices continue to rise, it may indicate waning conviction. The current volume profile aligns with the price surge, reinforcing the bullish case.
Relative Strength Index (RSI)
The RSI stands at 72, nearing overbought territory, which typically signals a potential pullback. However, in a strong uptrend, RSI can remain elevated for extended periods. A drop below 60 may not necessarily indicate weakness but rather a healthy consolidation phase.
Fibonacci Retracement
Key retracement levels at 38.2% ($330.50) and 50% ($320.50) have shown strong support/resistance behavior. The current price sits near the 38.2% level, suggesting a possible test of $320.50 before resuming the uptrend.

The confluence of rising moving averages, bullish candlestick patterns, and strong volume supports the continuation of the uptrend. However, overbought RSI and KDJ levels highlight the risk of a near-term correction. Traders should monitor the 38.2% Fibonacci and 50-day MA for potential entry points, while a breakdown below $316.15 could invalidate the bullish case. Divergence between MACD and KDJ suggests caution, as momentum may slow before resuming.