Microchip Tech Extends Losses to 1.94% Amid Bearish Technical Signals

Microchip Technology (MCHP) declined 1.30% in the latest session, marking its third consecutive daily loss with a cumulative 1.94% drop during this period. This sustained downward momentum sets the context for a multi-indicator technical assessment.
Candlestick Theory
Recent sessions show three consecutive bearish candles with lower highs and lower lows, confirming near-term selling pressure. Key support emerges at $64.40 (August 19 low), near the significant August 12 swing low of $64.50. Resistance is evident at $66.40 (August 19 high), a level that has capped prices multiple times this week. The failure to sustain gains above $66.00 suggests persistent overhead supply.
Moving Average Theory
The 50-day MA ($66.80) crossed below the 100-day MA ($67.20) last week, signaling deteriorating medium-term momentum. Current price ($64.71) trades below both shorter-term averages but remains above the rising 200-day MA ($62.40). This configuration suggests established long-term support but fading intermediate bullishness, with the 200-DMA potentially acting as a critical floor.
MACD & KDJ Indicators
MACD shows sustained negative divergence since early August, with its signal line maintaining a bearish trajectory below the zero line. KDJ metrics depict oversold conditions (K:22, D:28, J:10), though both oscillators show no clear reversal signals. This convergence of bearish MACD momentum with deeply oversold KDJ readings creates ambiguity, warranting caution despite short-term oversold extremes.
Bollinger Bands
Price hit the lower band ($64.20) on August 19 amid expanding bandwidth, confirming rising volatility. The 20-day band midpoint ($66.10) aligns with overhead resistance. This band expansion during a downtrend typically signals continuation potential, though a close back inside the bands could precede stabilization. The current lower band proximity may attract dip-buyers.
Volume-Price Relationship
Distribution patterns stand out: The August 12 surge (+5.82%) occurred on 12.7 million shares (YTD’s second-highest volume), yet subsequent breakdowns saw below-average volume. This divergence between high-volume rallies and lower-volume declines suggests weak institutional accumulation, questioning recovery sustainability. Recent down days show diminishing volume, potentially indicating waning selling pressure.
Relative Strength Index (RSI)
The 14-day RSI (34) approaches oversold territory but hasn’t breached the 30 threshold. This neutral positioning avoids extreme readings despite price weakness. Historically, RSI values below 30 during July and April triggered bounces, making the $63–$64 zone a critical monitor point. Current momentum doesn’t yet signal exhaustion.
Fibonacci Retracement
Using the $75.26 (July 22 high) to $60.95 (August 11 low) range, key retracements emerge: 38.2% ($66.60), 50% ($68.10), and 61.8% ($69.65). Recent reversals occurred near the 38.2% level, reinforcing its resistance significance. The 23.6% retracement ($63.80) now converges with the $64.40–$64.50 price support cluster, creating a high-probability bounce zone if tested.
Confluence and Divergence
Significant confluence exists at $63.80–$64.50, merging Fibonacci, horizontal price, and 200-DMA supports. Bullish divergence appears between price making lower lows and RSI/KDJ forming higher lows since mid-August, suggesting weakening downside momentum. However, bearish confluence dominates near $66.40, aligning with Bollinger Midband and recent rejection zones. The conflict between oversold oscillators and unresolved MACD bearishness requires resolution through either a momentum reversal or breakdown confirmation.
This configuration implies limited downside near $64.00 but requires decisive reclamation of $66.40 to negate bearish momentum. Failure to hold $63.80 would target the $60.95 August low, where Fibonacci and moving average supports would face critical retesting.