Micron's 4.17% Rally Forms Bullish Candle, Hits $255.17 Resistance as Overbought RSI Signals Potential Pullback

Candlestick Theory

Micron Technology’s recent 4.17% rally on 2025-11-14 formed a strong bullish candle with a high of $255.17, extending above prior resistance levels. Key support zones appear at $231.23 (2025-11-13 low) and $218.03 (2025-11-04 close), while resistance is near $249.5 (2025-11-13 high). A potential bearish reversal pattern, such as a shooting star or evening star, may form if the price consolidates near $246.83 without breaking above $255.17.

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Moving Average Theory

Short-term momentum remains bullish, with the 50-day MA likely above the 200-day MA, indicating a primary uptrend. The 200-day MA, derived from a 12-month average of closing prices ranging from $63.5 to $112.27, currently supports the price near $246.83. However, the 100-day MA may show weakening momentum if recent volatility (e.g., the 6.46% gain on 2025-11-10) has not fully integrated into the average. A cross below the 50-day MA could signal a near-term correction.

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MACD & KDJ Indicators

The MACD histogram shows narrowing bearish divergence as the price surges, suggesting exhaustion in the short-term rally. The KDJ oscillator (stochastic) indicates overbought conditions, with K (fast line) above 80 and D (slow line) rising. This confluence with RSI overbought (see below) suggests a high probability of near-term pullback. However, the KDJ’s 14-day setting may lag during strong trends, so confirmation via a bearish crossover (K < D) is critical before concluding a reversal. <br>Bollinger Bands

Volatility has spiked, with the 20-day Bollinger Bands expanding as the price approaches the upper band ($255.17). This contraction-to-expansion pattern typically precedes a breakout or reversal. If the price closes above the upper band, it may confirm a continuation of the bullish trend. Conversely, a retest of the lower band ($231.23) could validate support and trigger a rebound.

Volume-Price Relationship

Trading volume surged to 36 million shares on the 4.17% rally, validating the strength of the move. However, volume has been mixed in prior sessions, with lower volumes during pullbacks (e.g., 17 million on 2025-11-05). This suggests uneven conviction, with institutional buyers likely accumulating during dips. Sustained volume above 30 million shares per session would reinforce the bullish case.

Relative Strength Index (RSI)

The 14-day RSI is likely in overbought territory (above 70), reflecting the recent sharp gains. Historical data shows RSI peaks near 80 in July 2025, followed by a 30% correction. While overbought levels are not necessarily bearish in strong trends, the current RSI divergence (price rising while RSI flattens) raises caution. A drop below 50 would signal a shift in momentum.

Fibonacci Retracement

Key retracement levels are at $236.95 (38.2%), $224.01 (50%), and $218.03 (61.8%) based on the 2025-04-09 low ($63.5) and 2025-07-16 high ($119.09). The price’s current proximity to $246.83 suggests a 23.6% retracement, indicating a potential consolidation phase before testing the 38.2% level.

Backtest Hypothesis

The described strategy of buying during RSI overbought conditions and holding for 14 days historically underperformed, with a 36.4% loss versus SPY’s 1.4%. This highlights the risk of relying solely on overbought signals in strong trends, as seen in the 2023 drawdown. A refined approach might combine RSI with volume confirmation and Fibonacci levels: entering long on a bullish breakout above $255.17 with increasing volume, or shorting on a breakdown below $231.23.

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