MSTR Slumps 3.18% as Bearish Death Cross and Oversold RSI Signal Extended Downtrend

Strategy (MSTR) Current Technical Analysis

Strategy (MSTR) closed at $320.29 on 2025-10-09, down 3.18% from the previous session. The recent price action reflects a bearish bias, with key technical indicators converging on a downtrend narrative. Below is a synthesis of the analysis across multiple frameworks.

Candlestick Theory

The price action over the past two weeks reveals a series of bearish patterns, including hanging man and shooting star formations near key resistance levels. A critical support level appears to be forming at $318.22 (the 2025-10-09 low), while resistance clusters near $330.80 (2025-10-08 high) and $358.25 (2025-09-18 high). A breakdown below $318.22 may trigger a test of the $300.70 level (2025-09-25 low), with potential for further downside.

Moving Average Theory

The 50-day moving average (calculated at ~$335) currently lies above the 200-day MA (~$325), but the 10-day MA (~$320) has crossed below both, forming a death cross. This suggests short-term bearish momentum, though the 100-day MA (~$340) remains above the 200-day MA, indicating the longer-term trend remains neutral. A sustained close above $335 could reinvigorate bullish sentiment.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line crossing below the signal line, reinforcing the bearish bias. The KDJ indicator (Stochastic) shows the %K line at ~20 and %D at ~25, suggesting oversold conditions. However, a bearish divergence is evident: price lows are lower while the KDJ indicator fails to make new lows, hinting at potential exhaustion in the downtrend.

Bollinger Bands

Volatility has expanded recently, with the bands widening to 15% width. The price is currently near the lower band at $318.22, a classic overbought/oversold level. A bounce off the lower band may occur, but sustained trading within this range could signal a continuation of the downtrend.

Volume-Price Relationship

Trading volume surged on the 2025-10-07 session (19.58M shares) during the 8.7% drop, confirming bearish conviction. However, volume has since declined, suggesting weakening selling pressure. This divergence may foreshadow a short-term reversal, though confirmation is needed via a bullish candlestick pattern or a break above $330.80.

Relative Strength Index (RSI)

The 14-day RSI stands at ~28, firmly in oversold territory. While this typically signals a potential rebound, the RSI has remained below 30 for three consecutive sessions, indicating a possible continuation of the downtrend. A close above 30 would be necessary to validate a short-term recovery.

Fibonacci Retracement

Key retracement levels from the recent $358.25 high to $300.70 low include:

- 23.6%: $340.00

- 38.2%: $330.00

- 50%: $329.48

- 61.8%: $318.85

The 38.2% level ($330.00) appears to be acting as a dynamic resistance, with the price failing to hold above it in recent sessions. A break below the 61.8% level ($318.85) would likely accelerate the downtrend.

Backtest Hypothesis

The backtest strategy of selling MSTR when RSI exceeds 70 (overbought) has shown a 54.60% win rate over 30 days with an average return of 7.63% since 2022. However, current conditions (RSI at 28) suggest this strategy is not immediately applicable. A hypothetical trigger would require a sharp rebound pushing RSI above 70, followed by a short-term sell-off. Given the current oversold reading and bearish divergence in KDJ, the strategy’s efficacy remains contingent on a reversal rather than a continuation of the downtrend.

Conclusion

The technical landscape for Strategy (MSTR) favors a continuation of the bearish trend in the near term, supported by confluence among candlestick patterns, moving averages, and MACD. While oversold RSI and KDJ divergence hint at potential exhaustion in selling pressure, the absence of bullish confirmation (e.g., volume spikes, break above key levels) suggests caution. Traders should monitor the $318.22 support and $330.00 retracement level for potential pivots, with the backtest strategy remaining on standby for a hypothetical overbought scenario.