Microchip Technology Drops 2.45% Amid Bearish Technical Signals

Microchip Technology (MCHP) declined 2.45% in the latest session, closing at $64.96 with trading volume of 6.05 million shares. The stock reached an intraday high of $67.415 but retreated to the day’s low of $64.735, reflecting persistent selling pressure. This analysis examines key technical indicators to contextualize the current price action.
Candlestick Theory
Recent candlestick patterns reveal bearish signals, particularly the October 6–7 formation resembling a bearish engulfing setup. The October 6 session closed near $66.59 after reaching $67.77 (signaling rejection near resistance), followed by October 7’s decisive down move closing near the low at $64.96. Key support is evident near $63.00–$63.50, established by September 30 and October 1 lows. Resistance is firm at $67.50–$68.00, reinforced by the October 3 high of $69.00 and multiple prior rejections. A sustained break below $63.00 may trigger accelerated selling, while reclaiming $68.00 could signal reversal potential.
Moving Average Theory
The 50-day moving average (~$67.80) and 100-day moving average (~$66.20) both hover above the current price, confirming a near-term downtrend. The 200-day moving average (~$60.50) remains below the price, preserving the broader bullish structure but offering no immediate support. The sequential alignment (50 < 100 > 200) reflects a consolidating market, but the current price trading below all short-term averages emphasizes bearish momentum. A decisive break above the 50-DMA is needed to invalidate the downside bias.
MACD & KDJ Indicators
The MACD histogram shows sustained negative territory, with the signal line dominating the MACD line—a bearish momentum signature. Meanwhile, the KDJ oscillator signals near-oversold conditions, with the %K line (~28) approaching the oversold threshold (<30). This divergence creates tension: momentum remains negative (MACD), but short-term exhaustion may be developing (KDJ). Traders should monitor for a potential MACD bullish crossover to validate KDJ’s oversold signal.
Bollinger Bands
Bollinger Bands expanded during the October 2–6 volatility spike, but the October 7 close near the lower band ($64.50–$65.00) highlights persistent downward pressure. The 20-day moving average (mid-band) slopes downward at $66.30, reinforcing resistance. Band expansion alongside lower price lows suggests bearish momentum dominance. A contraction in bandwidth, coupled with price stabilization near the lower band, would indicate potential consolidation or reversal.
Volume-Price Relationship
Volume trends show bearish non-confirmation: the 2.45% decline on October 7 occurred on lower volume (6.05M shares) than the preceding up day (6.41M shares on October 6). This divergence suggests weakening downside conviction. However, the September 30–October 2 rally saw volume expansion (8.40M to 6.22M), indicating accumulation. Sustained bullish reversals require volume validation exceeding recent averages (~6.5M shares).
Relative Strength Index (RSI)
The 14-day RSI reads approximately 46, near neutral territory but trending downward from October 3’s 55 level. While not oversold (<30), its trajectory suggests building bearish momentum. Historically, RSI divergences preceded reversals—notably in late September when higher lows in RSI contradicted lower price lows, foreshadowing the October 2 rally. No such divergence exists currently, implying bearish continuity absent intervention.
Fibonacci Retracement
Applying Fibonacci to the July 22 high ($75.26) and September 30 low ($63.03) reveals critical levels. The 61.8% retracement ($67.70) aligns with recent resistance, while the 78.6% level ($65.65) held briefly before the October 7 breakdown. A sustained close below $65.65 suggests vulnerability to the 100% retracement at $63.03. Confluence between this level and horizontal support at $63.00 makes it a pivotal zone for buyers.
Concluding Synthesis
Technical confluence centers on the $63.00–$65.65 support zone, where Bollinger Band positioning, KDJ near-oversold signals, and Fibonacci retracements converge. However, bearish momentum dominates via MACD, RSI trajectory, and moving average resistance. Volume divergence suggests limited follow-through selling, but an actionable reversal requires: 1) reclaiming $67.50–$68.00 to disrupt the candlestick resistance structure, and 2) MACD bullish crossover confirmation. Until these conditions materialize, the path of least resistance favors consolidation with a bearish tilt.