Monolithic Power Surges 10.46% to $785.62 Amid Strong Bullish Momentum

Monolithic Power (MPWR) surged 10.46% in the latest session, closing at $785.62 after testing the $803 high amid elevated volume ($1.18B). This strong bullish momentum sets the context for our technical assessment.
Candlestick Theory
The recent session formed a robust bullish marubozu candle with minimal upper shadow, indicating intense buying pressure after piercing the $740 resistance (former July 31 high). This breakout was preceded by a hammer pattern at $711.46 support on July 31, reinforcing that level as a key pivot. Critical resistance now resides near the psychological $800 level, while $711–$706 forms a multi-tested support confluence zone spanning late-July lows.
Moving Average Theory
The ascending 50-day MA (~765) decisively crossed above the 100-day MA (~730) in early July, confirming bullish momentum. Price remains firmly above all three key MAs (50/100/200-day), with the 200-day MA (~690) sloping upward. This alignment signals a sustained uptrend. However, the widening gap between price and the 200-day MA suggests potential mean-reversion risk.
MACD & KDJ Indicators
MACD shows a bullish crossover above its signal line but exhibits negative divergence—recent price highs exceeded August levels while the MACD peak did not, suggesting weakening momentum. The KDJ oscillators (K:86, D:79, J:100) reflect overbought territory, with J-line hitting 100. Historically, such extremes preceded short-term pullbacks (e.g., mid-June decline after J-line peaked at 98).
Bollinger Bands
Bands expanded sharply during the 10.46% surge, reflecting surging volatility. Price closed near the upper band ($790), typically indicative of overextended conditions. The 20-day average price ($735) aligns with the lower band, suggesting $720–$730 may offer support if profit-taking emerges.
Volume-Price Relationship
The breakout occurred on the highest volume since May 12 (another major rally), lending credibility to the move. However, note that June’s peak at $803 (June 11) saw volume 25% higher than the current surge, revealing modest distribution pressure at all-time highs. Down days in late July showed volume contraction, indicating limited selling conviction.
Relative Strength Index (RSI)
The 14-day RSI (75) entered overbought territory. While concerning in isolation, its relevance is tempered by the stock’s strong trend structure. Previous breaches above 70 (e.g., May 12, June 16) resolved through sideways consolidation rather than sharp declines. Nonetheless, it amplifies short-term caution advised by KDJ.
Fibonacci Retracement
Applying Fibs between the April 11 low ($533.13) and August 1 high ($803) reveals critical levels. The 38.2% retracement ($700) held as support during July’s consolidation. The 23.6% level ($740) now acts as immediate support, aligning with the 50-day MA. A decisive break below $700 (50% retracement) would invalidate the near-term uptrend.
Confluence & Divergence
Bullish confluence appears at $740 support, reinforced by the 50-day MA and 23.6% Fib. Conversely, bearish divergence emerges via MACD’s fading momentum against rising prices and overbought KDJ/RSI readings aligned with $800 resistance. Volume discrepancy at recent highs versus June further questions sustainability.
Conclusion
Monolithic Power exhibits robust long-term momentum, evidenced by moving average alignment and volume-backed breakouts. However, short-term indicators suggest exhaustion near $800 resistance, with RSI/KDJ overbought signals and MACD divergence warranting caution. Probabilistic support rests at $740 (50-day MA/Fib), with a breakdown below $700 indicating deeper correction potential. Traders should monitor volume patterns for confirmation of either continuation or consolidation.