Microchip Tech Surges 5.82% on Bullish Reversal Confirming MA and MACD Golden Cross

Candlestick Theory

Microchip Technology (MCHP) closed at $64.5 on 2025-08-12, surging 5.82% on a bullish candle with a long upper wick (high of $66.495) and a defined real body. This suggests aggressive buying pressure after a prior bearish phase, as seen in the preceding week’s sharp decline (e.g., -6.57% on 2025-08-08). Key support levels emerge at $60.84–$61.87 (August 8–11), while resistance aligns with the recent high of $66.49 and the July 22 peak of $75.26. A break above $66.22 (August 7 close) may confirm a reversal from the descending triangle pattern formed since mid-July.

Moving Average Theory

The 50-day MA (calculated from the 1-year data) currently trends above the 100-day and 200-day MAs, indicating a short-term bullish bias. The 50-day line, hovering near $63–$64, acts as dynamic support, while the 200-day MA (~$60–$61) reinforces the $60.84 support zone. Divergence occurs between the 100-day and 200-day MAs, suggesting intermediate-term uncertainty. A crossover above the 100-day MA would strengthen the case for a sustained uptrend.

MACD & KDJ Indicators

The MACD line crossed above the signal line (golden cross) in late July, aligning with the recent rally. This, combined with the RSI (discussed below), suggests overbought conditions but not yet extreme. The KDJ indicator shows stochastic lines converging near overbought territory (K ~80, D ~75), indicating a potential pullback. However, the MACD’s sustained positive divergence (bullish) contrasts with the KDJ’s potential reversal signal, creating a mixed outlook.

Bollinger Bands

Volatility has expanded in August, with the upper band at ~$66.5 and the lower band at ~$60.5. The recent close at $64.5 sits near the midline, suggesting consolidation after the July–August volatility. A breakout above the upper band or below the lower band would signal a shift in momentum, though the current positioning implies sideways movement.

Volume-Price Relationship

Trading volume spiked on the 5.82% rally (12.68M shares), validating the move. However, the volume on the subsequent session (8.22M) was relatively lower, hinting at possible exhaustion. The volume profile shows a healthy increase during upward moves (e.g., 2025-07-22, 2025-08-07) but inconsistent strength on declines, suggesting buyers dominate in the short term.

Relative Strength Index (RSI)

The RSI has entered overbought territory (>70) since late July, peaking at ~75. This signals caution, as overbought levels often precede corrections. However, the RSI’s failure to form lower highs despite price declines (e.g., August 8–11) suggests resilience. A drop below 50 would confirm a bearish trend reversal, but current readings imply momentum remains intact.

Fibonacci Retracement

Key Fibonacci levels from the July 22 high ($75.26) to the August 8 low ($60.875) include 38.2% at $67.5 and 61.8% at $63.8. The current price of $64.5 aligns with the 61.8% retracement level, acting as a critical support/resistance zone. A break below this level could target the 78.6% retracement at $60.8, while a rally above $67.5 may test the 50% level at $68.0.

Backtest Hypothesis

The MACD golden cross strategy, as described, demonstrates robust historical performance with a 70% profit and 10% maximum drawdown from 2022 to the present. Applied to MCHP, the July 2025 golden cross aligns with the recent price surge, validating the strategy’s relevance. The low drawdown and consistent monthly returns (except one month) suggest it could mitigate risk while capturing momentum. However, the current overbought RSI and KDJ divergence imply caution—entry timing should prioritize confirmation of bullish signals (e.g., a close above $66.22) to avoid false breakouts.