Micron Technology Surges 5.84% on Bullish Reversal Pattern as Price Breaks Above Previous High

Micron Technology (MU) closed the most recent session with a 5.84% gain, reaching $196.54, which aligns with a bullish reversal pattern on the candlestick chart. The recent price action shows a strong rejection of a prior support level around $183.24 (October 7 low) and a break above the October 6 high of $201, suggesting a potential shift in momentum. Key resistance levels are now likely to form at $196.54 (current close) and $201 (previous high), while immediate support could be tested at $185.69 (October 7 close) and $183.24.

Candlestick Theory

The recent bullish candlestick pattern, characterized by a long upper shadow and a strong close near the high, indicates aggressive buying pressure. This pattern often precedes a continuation of the uptrend, especially when accompanied by high volume. The absence of bearish confirmation (e.g., a lower close after a prior high) suggests that the current rally may persist unless a key resistance level (e.g., $201) is decisively breached.

Moving Average Theory

The 50-day moving average (approximately $165–$170 based on the 2025 data) is significantly below the current price, confirming a strong short-term uptrend. The 200-day moving average (around $95–$100) provides a long-term bullish backdrop, as the price remains well above this threshold. The 100-day MA ($140–$150) also supports the idea of a multi-month uptrend, with the 50-day MA crossing above the 100-day MA in recent weeks, reinforcing bullish momentum.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line above the signal line, indicating strengthening momentum. The KDJ oscillator (Stochastic RSI) shows overbought conditions (K > 80), suggesting potential exhaustion in the near term. However, the D line remains elevated, indicating that the uptrend may persist despite short-term volatility. Divergence between the MACD and KDJ—where MACD continues to rise while KDJ peaks—may hint at a possible pullback, but the overall alignment of momentum indicators remains bullish.

Bollinger Bands

The price has recently tested the upper Bollinger Band, with volatility expanding as the bands widen. This expansion aligns with the strong price action, and the current close at $196.54 sits near the upper band, suggesting overbought conditions. A retest of the lower band ($170–$180) could trigger a countertrend bounce, but the sustained position near the upper band implies continued bullish bias.

Volume-Price Relationship

Trading volume surged on the recent 5.84% rally, with a volume of 26.8 million shares, significantly higher than the prior session’s 27.8 million. This validates the strength of the price move and suggests institutional participation. However, if volume begins to contract while the price remains elevated, it could signal weakening conviction, warranting closer monitoring of follow-through buying.

Relative Strength Index (RSI)

The 14-period RSI has entered overbought territory (>70), reflecting the sharp recent gains. While this does not guarantee a reversal, historical data for MU indicates that overbought RSI levels often precede corrections rather than sustained trends. However, the backtest strategy (see below) suggests that holding through overbought periods has yielded positive long-term outcomes, implying that short-term pullbacks may not derail the broader uptrend.

Fibonacci Retracement

Key Fibonacci levels derived from the recent high ($201) and low ($183.24) include 38.2% at $192.50 and 61.8% at $187.50. These levels may act as dynamic support zones for the stock. A breakdown below $187.50 could trigger a test of the $183.24 pivot point, while a breakout above $201 would target the next Fibonacci extension at $209.

Backtest Hypothesis

The backtest strategy evaluated the performance of holding Micron Technology (MU) during RSI overbought periods from 2022 to the present. Results indicated mixed short-term outcomes, with some overbought periods leading to immediate pullbacks, but a higher win rate and overall positive returns in the long term (e.g., 6–12 months). This suggests that while RSI overbought conditions may signal short-term volatility, the stock’s underlying fundamentals and momentum have historically supported sustained gains. Integrating this into the current analysis, the recent overbought RSI reading should be interpreted cautiously but with a bias toward holding, given the strong alignment of moving averages, MACD, and volume.