Micron Tech Surges 4.42% on Strong Bullish Momentum Extends 8-Day Rally to 32.71% Gain

Micron Technology (MU) has surged 4.42% in the most recent session, extending its winning streak to eight consecutive days with a cumulative gain of 32.71%. The stock’s price action reflects strong bullish momentum, with a series of higher highs and higher lows forming a clear uptrend. Key support levels appear to be consolidating around the $140–$142 range, last tested in early September, while immediate resistance is near the recent high of $157.23. A breakdown below $140 could trigger a retest of these lower levels, but the sustained volume and price action suggest buyers remain in control.

Candlestick Theory

The recent price action features a bullish "engulfing" pattern as the last candle closed near its high, indicating strong institutional buying. Additionally, the absence of long upper shadows in the past eight sessions suggests minimal short-term resistance. A potential "piercing line" pattern is forming near the $140 level, where a prior bearish candle was followed by a bullish reversal. These formations reinforce the likelihood of continued upward bias, provided the $140 support holds.

Moving Average Theory

The 50-day moving average (MA) is currently above the 200-day MA, confirming a bullish trend. The 100-day MA is converging upward, aligning with the 50-day MA to form a "golden cross" confluence. Price remains well above all three MAs, with the 50-day MA acting as a dynamic support. A break below the 50-day MA ($135–$138 range) would signal a shift in sentiment, but the current positioning above the 100-day MA ($135–$138) suggests the uptrend remains intact.

MACD & KDJ Indicators

The MACD histogram has shown increasing positive divergence, with the line crossing above the signal line in late August, forming a "golden cross." This aligns with the KDJ indicator’s overbought reading (K=85, D=80), which suggests exhaustion but not necessarily a reversal. A bearish divergence in the KDJ (e.g., a lower high in K while price makes a new high) would signal caution. However, the MACD’s sustained strength and the KDJ’s alignment with the price trend suggest the rally may continue, albeit with heightened overbought risks.

Bollinger Bands

Volatility has expanded significantly, with price trading near the upper band for much of the past two weeks. This "overbought" condition is reinforced by the narrow band contraction observed in mid-August prior to the breakout. The relative position near the upper band suggests continuation of the trend, but a close below the middle band ($145–$148) would indicate weakening momentum. The 20-day standard deviation is at a 12-month high, confirming elevated volatility.

Volume-Price Relationship

Trading volume has spiked during the rally, with the most recent session seeing 32.29 million shares traded—a 12-month peak. The volume surge aligns with price highs, validating the strength of the move. However, a divergence in volume (e.g., lower volume on new highs) could signal waning momentum. The current volume profile supports the bullish case, with no signs of "volume exhaustion" despite the aggressive move.

Relative Strength Index (RSI)

The 14-day RSI is currently at 72, entering overbought territory. While this is not an immediate sell signal in a strong uptrend, a pullback to 60–65 would be necessary to avoid overbought exhaustion. A bearish divergence (e.g., RSI forming lower highs while price makes higher highs) would strengthen the case for a near-term correction. Historically, RSI has corrected to 55–60 after similar overbought levels, suggesting a potential retracement before further upside.

Fibonacci Retracement

Key retracement levels from the August 20–September 12 rally (from $117.21 to $157.23) include 38.2% at $137.50 and 50% at $137.22. These levels coincide with the 50-day and 100-day MAs, forming a critical confluence zone. A breakdown below 38.2% would shift focus to the 61.8% retracement at $133.75, where the 200-day MA also resides. A bounce from this level would suggest continuation of the trend, while a failure to hold it could signal a deeper correction.

Backtest Hypothesis

The backtest strategy of buying Micron Technology (MU) on a MACD golden cross and holding for five days achieved a 58.71% return, outperforming the benchmark by 16.98% with a Sharpe ratio of 0.76. This aligns with the current technical setup, where the MACD golden cross in late August coincided with the initial leg of the rally. The strategy’s success is reinforced by the confluence of bullish MAs, strong volume, and overbought RSI (suggesting continued momentum). However, the recent overbought condition and Fibonacci retracement levels imply a potential pullback to 60–65 on RSI before further upside. The low drawdown and high Sharpe ratio suggest the strategy is robust, but caution is warranted if the stock fails to hold the 50-day MA or if a bearish KDJ divergence emerges.