Microchip Technology Extends Losses to 2.3% Amid Bearish Technical Signals

Microchip Technology (MCHP) closed at $71.48 on July 7, 2025, declining 2.16% and extending its losing streak to two consecutive sessions with a cumulative 2.30% drop. The session’s price action featured a high of $73.565 and a low of $71.115, reflecting increased selling pressure near recent resistance. The following technical analysis evaluates this movement within broader market context using established methodologies.
Candlestick Theory
Recent sessions show Microchip Technology forming a bearish engulfing pattern on July 3–7, as the July 7 red candle ($71.115–$73.565, close $71.48) fully consumed the prior session’s green candle body. This suggests weakening bullish momentum. Key support emerges at $70.37 (June 30 low), while resistance is established at $74.40 (July 3 high). A decisive break below the $70 psychological level could accelerate selling pressure, whereas a rebound above $73.56 would invalidate the bearish signal.
Moving Average Theory
The 50-day moving average (currently near $68) remains above the 100-day (~$65) and 200-day (~$60), preserving the long-term uptrend structure. However, price recently crossed below the 50-DMA after peaking at $73.565, indicating short-term bearish momentum. The 200-DMA’s upward slope underscores the broader bullish trend, but sustained trade below the 50-DMA may trigger a retest of the 100-DMA support near $65.
MACD & KDJ Indicators
The MACD histogram shows diminishing bullish momentum, with the signal line threatening to cross below the MACD line. KDJ curves exhibit a bearish crossover in overbought territory (K-line crossing below D-line above 80), aligning with the recent pullback. This convergence suggests near-term downward pressure. Should the KDJ fall below 50, it may reinforce bearish control.
Bollinger Bands
Price breached the upper Bollinger Band on July 2–3, signaling overextended conditions. The subsequent reversal has pushed prices toward the 20-period moving average (mid-band near $70). Band width contraction since late June indicates declining volatility, often preceding directional breakouts. A close below the mid-band would open a path to the lower band near $66.
Volume-Price Relationship
Down days on July 7 and June 27 saw notably higher volume than adjacent sessions, confirming distribution. The July 2 rally to $73.52 occurred on elevated volume (8.24M shares), establishing conviction at that resistance. Current volume trends validate the pullback, with weak volume on rebound attempts (e.g., July 3) implying lackluster buying interest. Sustained recovery requires volume expansion above the 10-day average (~7M shares).
Relative Strength Index (RSI)
The 14-day RSI declined from 68 on July 2 to 54 on July 7, exiting near-overbought territory without reaching oversold conditions. While not yet signaling oversold, the momentum shift from overbought warns of near-term exhaustion. A break below 50 would strengthen bearish momentum, whereas holding above 50 may support consolidation.
Fibonacci Retracement
Applying Fibonacci to the swing low of $55.33 (May 9) and high of $73.56 (July 7), key retracement levels emerge at $70.50 (23.6%), $68.80 (38.2%), and $66.60 (50%). The current price hovers near the 23.6% level. Confluence exists at $70.50, aligning with the June 30 low and 50-DMA. A decisive break below this cluster could target the 38.2% retracement.
Confluence and Divergence Observations
Confluence appears at $70.50–$70.37, where Fibonacci 23.6%, the 50-DMA, and the June 30 low converge. A breakdown here would align with bearish MACD/KDJ crossovers, volume-supported selling, and RSI downtrend. Divergence exists between Bollinger Band contraction (neutral volatility signal) and other momentum indicators (bearish bias), suggesting rangebound action may precede the next leg. Near-term momentum favors bears, but the 200-DMA uptrend implies broader bullish resilience. A recovery above $73.56 would reactivate bullish objectives, while failure at $70 invites a test of $68.80 support.