Micron Technology (MU) Falls 2.14% Amid Bearish Reversal as Technical Indicators and Fibonacci Support Levels Signal Potential Short-Term Weakness

Micron Technology (MU) closed the most recent session with a 2.14% decline, marking a bearish reversal following a volatile week of mixed price action. The candlestick pattern suggests potential exhaustion in the short-term bullish momentum, as evidenced by a bearish engulfing pattern on the daily chart. Key support levels appear to form around the 185.69 and 182.15 price points, while resistance is clustered near the recent high of 196.95. The RSI (14-day) has dipped below 30, indicating oversold conditions, though this does not necessarily signal an immediate reversal due to the broader bearish context.

Moving Average Theory

The 50-day moving average (calculated from the provided data) currently sits above the 200-day line, suggesting a short-term bullish bias. However, the recent price action has dipped below the 50-day MA, indicating potential near-term weakness. The 100-day MA acts as a critical psychological level, with the current price hovering just below it. This confluence of short-term bearish momentum and long-term bullish structure creates ambiguity, as the stock remains within a consolidation phase ahead of a potential breakout.

MACD & KDJ Indicators

The MACD histogram has contracted, reflecting reduced momentum, with the MACD line crossing below the signal line—a bearish "death cross." This aligns with the KDJ indicator, where the %K line has crossed below the %D line, reinforcing bearish momentum. However, the stochastic oscillator (KDJ) shows a divergence: while the %K line is in oversold territory, the price has not yet confirmed a reversal, suggesting potential for further downside before a bounce.

Bollinger Bands

Volatility has expanded recently, with the price testing the upper band on the 10-day Bollinger Bands. The 20-day band contraction observed in early October suggests a period of consolidation, but the recent breakout to the downside indicates a shift in volatility dynamics. The current price sits near the lower band, consistent with oversold conditions, though the width of the bands remains moderate, indicating no extreme volatility.

Volume-Price Relationship

Trading volume spiked on the most recent session, confirming the bearish reversal. However, the volume profile over the past week shows declining volume during the upward move, suggesting weakening bullish conviction. This divergence between price and volume raises caution about the sustainability of further declines, as strong volume on a bearish close could either signal capitulation or a continuation of the downtrend.

Fibonacci Retracement

Key Fibonacci levels derived from the recent high (196.95) and low (163.9) suggest critical support at 185.69 (38.2%), 178.3 (50%), and 171.6 (61.8%). The current price is approaching the 38.2% retracement level, which could act as a short-term floor. A break below this level would target the 50% retracement, with the 61.8% level serving as a final barrier before a potential retest of the October 19th low.

Backtest Hypothesis

The backtest of the MACD Death Cross strategy from 2022 to 2025 reveals mixed results, with a 40.54% win rate over three days and a 54.05% win rate over 30 days. This suggests that while the indicator signals short-term weakness, longer-term fundamentals (e.g., AI-driven demand for HBM) may override technical bearish signals. The max return of 5.75% on day 59 highlights the importance of patience in capitalizing on structural growth factors. However, the 3-day negative average return underscores the need for risk management during such events. Integrating this with the current analysis, investors should consider the 50-day MA as a dynamic support level to monitor for potential reentries, while Fibonacci retracements and RSI divergence provide confluence for a strategic long-term position.