Microchip Technology Jumps 4.29% to $68.05 on Bullish Technicals

Microchip Technology (MCHP) concluded the most recent session with a significant 4.29% gain to $68.05, marking its second consecutive day of gains and a 5.72% advance over this period. This strong upward movement warrants a comprehensive technical analysis using the specified framework.
Candlestick Theory
The recent price action shows two strong bullish candles, confirming a recovery from the $60 psychological support area tested in early June. The large bullish candle on June 3rd (6.40% gain, high volume) established $59.89 as a major swing low and support zone. Resistance near the June highs around $68.60-$68.80 appears significant, having capped rallies on June 5th and June 9th. A sustained break above $68.80 is needed to signal continuation, while failure here may lead to consolidation near the $65.25 recent swing high/low pivot point.
Moving Average Theory
The 50-day and 100-day moving averages are converging near $58-$59, reflecting a basing pattern over the past two months following the sharp decline from March highs. Crucially, the price is trading above all key MAs (50, 100, 200-day). The 200-day MA near $62.50 has flipped from resistance to support after the May-June recovery, suggesting a potential shift to a medium-term uptrend. The Golden Cross pattern (50-day crossing above 200-day) may be imminent if the current rally holds, potentially providing longer-term bullish confirmation. Short-term momentum remains positive above the 20-day EMA near $64.80.
MACD & KDJ Indicators
The MACD (12,26,9) recently crossed above its signal line from below the zero line, generating a bullish signal that aligns with the price breakout above the 200-day MA. Histogram bars are increasing, suggesting building upside momentum. Concurrently, the KDJ indicator shows the %K line (14-period) crossed above the %D line from oversold territory (<30) in late May, confirming the bullish reversal. Current KDJ readings (approx. %K 80, %D 70) are approaching overbought territory but have not yet crossed downward, implying upward momentum remains intact in the near term.
Bollinger Bands
Price is pressing against the upper Bollinger Band (~$68.50), indicating strong upward momentum. Bandwidth has expanded significantly since late May, reflecting increasing volatility after the prolonged squeeze during April-May's consolidation. The breakout direction was decisively upward from the mid-Bollinger band (20-day SMA). While touching the upper band suggests near-term overextension, it typically denotes a strong trend. Sustained trading above the upper band is unusual and may signal an accelerating trend, but could also precede a brief consolidation or pullback towards the middle band ($64.80).
Volume-Price Relationship
Recent gains, particularly the 4.29% rise on June 9th, occurred on notably higher volume (11.97M shares) compared to the previous session (8.88M shares). This increase validates the breakout attempt. Key up days, such as the May 12th surge (10.18% on 21.35M shares) and the June 3rd rally (6.40% on 16.32M shares), saw substantially above-average volume, confirming significant accumulation and strong support near $60. Conversely, pullbacks generally occurred on lighter volume (e.g., May 23rd, June 5th), suggesting limited selling pressure during consolidations. The volume profile supports the sustainability of the recovery trend.
Relative Strength Index (RSI)
The 14-day RSI has risen sharply from oversold levels near 30 in mid-May to its current position near 65-70. This reflects strengthening momentum. While approaching the overbought threshold (70), it hasn't crossed it decisively yet. Previous advances saw the RSI reach the 75-80 zone (e.g., late March, early April) before significant pullbacks occurred. Current levels may indicate some near-term overheating but are not yet a definitive sell signal in a developing uptrend. Divergence would only occur if price makes a new high while RSI fails to confirm.
Fibonacci Retracement
Applying Fibonacci levels to the significant downtrend from the March 7th peak ($89.59) to the April 7th trough ($35.34) establishes key retracement zones. The price has decisively surpassed the 50% retracement level ($62.46) and tested the 61.8% level ($65.89) multiple times in June. It currently trades slightly above this 61.8% retracement, targeting the next major resistance near the 78.6% retracement at $70.80. Conversely, the 50% level ($62.46) now acts as significant support, backed by the 200-day MA nearby, while the 38.2% level ($59.00) represents a major higher low and trend support in conjunction with the cluster of moving averages.
Confluence Points & Divergences
A significant bullish confluence exists between the $60-$62 zone, where the 200-day MA ($62.50), the 38.2% Fib ($59.00), and the May-June swing low cluster provide strong technical support. This area was validated by high-volume rallies. Conversely, resistance confluence appears near the yearly midpoint and June highs around $68.60-$68.80, reinforced by the upper Bollinger Band and the psychologically important $70 level aligning with the 78.6% Fib. While MACD, KDJ, and volume confirm the current uptrend, minor caution arises from the RSI nearing overbought territory without the price having breached the June 9th high yet, potentially hinting at short-term consolidation pressure near resistance. No strong bearish divergences are currently evident among momentum oscillators. Overall technical structure suggests the path of least resistance is likely upwards, targeting the $70.80 resistance, provided support near $64.80/$65.25 holds.