Microchip Technology Slumps 5.56% In Two Days As Rally Falters At Key Resistance

Microchip Technology (MCHP) declined 3.24% in the most recent session, marking two consecutive days of losses totaling 5.56%. This price action occurs within the context of a volatile multi-month recovery from May 2025 lows near $40, which peaked at $69.60 on June 11 before the current pullback. The following analysis applies multiple technical frameworks to assess the stock's trajectory.
Candlestick Theory
The recent price action shows two bearish candles closing near session lows, confirming resistance near the $69.60-$70.00 psychological barrier. The long upper wick on June 12’s candle (high $69.19, close $67.93) indicated rejection of higher prices. Support emerges at $65.50 (June 13 low), aligning with the May 29 swing low of $65.50. A breakdown below this level would expose the crucial $60.00-$60.90 support zone established during the early June base formation.
Moving Average Theory
The 50-day moving average (approximately 58.00) and 100-day moving average (approximately 62.00) both slope upward below the current $65.73 close, supporting the intermediate-term recovery trend. However, the long-term 192-day moving average (approximately 70.00) remains in a downtrend and caps recent rallies. The current price trading below the 192-day MA but above shorter-term averages suggests a consolidation phase. The convergence of the 50-day and 100-day MAs may create dynamic support near $60.00.
MACD and KDJ Indicators
Momentum oscillators signal potential exhaustion following the June rally. The MACD likely registered a bearish crossover as the 12-day EMA crossed below the 26-day EMA during the two-day decline, confirming decelerating upward momentum. Similarly, the KDJ’s %K line appears to have exited overbought territory (>80) and crossed below %D, suggesting increasing downward pressure. While not yet in oversold territory, this alignment may prolong the current correction phase.
Bollinger Bands
Bollinger Band width contracted significantly during the May consolidation ($56-$60 range), preceding the sharp expansion during the early June rally. The price recently tested the upper band (near $70) and subsequently retreated toward the 20-period moving average (currently near $64.00). The current pullback toward the midline may signal a mean-reversion process, though a decisive break below $64.00 would suggest increased downside momentum.
Volume-Price Relationship
The recent distribution days (June 12 volume 7.7 million shares, June 13 volume 9.8 million shares) showed expanding volume during declines, validating bearish conviction. This contrasts with the accumulation during the June 3-10 advance, particularly the 16.3 million share surge on June 3. Volume patterns suggest more conviction exists in the current sell-off than in the preceding rally, increasing the sustainability of the downward move.
Relative Strength Index (RSI)
The 14-day RSI registers near 73, lingering at overbought thresholds despite the recent pullback. This divergence – prices retreating while RSI holds above 70 – warns that additional consolidation may be needed to reset conditions. The indicator’s persistent elevation since early June aligns with unsustainable vertical rallies but requires confirmation through a decisive break below the 65 support zone to signal momentum reversal.
Fibonacci Retracement
Applying Fibonacci levels to the $56.19 (May 23 low) to $69.60 (June 11 high) rally establishes key support thresholds. The 23.6% retracement at $66.00 has been breached, shifting focus to the 38.2% level at $64.19, which coincides with the 50-day moving average. The 50% retracement at $62.90 offers the next significant support, aligning with the volume-weighted average price of the June advance. Confluence at $64.19 makes it critical for maintaining the recovery structure.
Confluences emerge at the $64.19-$65.50 support zone, where the 38.2% Fibonacci level, 50-day moving average, and horizontal price support converge. Bearish divergences appeared as the RSI failed to confirm the June price highs while MACD momentum waned at lower highs. Probabilistically, the current consolidation may extend toward $64.19 before stabilizing. However, a break below $62.90 would invalidate the short-term bullish structure and signal retest of primary support at $60.00.