MUFG Surges 4.21% as Breakout from Consolidation Validates Gains

Mitsubishi Ufj (MUFG) experienced a 4.21% surge in the latest session, closing at ¥15.10, driven by a breakout from a consolidation phase. This sharp reversal followed a multi-week decline, with the price now testing key resistance levels established in late July. The recent volume spike (¥49.5 million) validates the move, though sustainability will depend on follow-through buying.

Candlestick Theory

The recent price action forms a bullish engulfing pattern, with the long white candle (¥14.96–15.15) dominating the preceding bearish session. Key support levels at ¥13.70–13.90 (congestion zone mid-July) and ¥14.40–14.50 (June–July range) remain critical. Resistance clusters at ¥14.80–14.90 (previous highs in early July) and ¥15.05–15.15 (current breakout level) suggest a potential pullback if the 50-day moving average (currently near ¥14.65) fails to hold.

Moving Average Theory

The 50-day MA (¥14.65) is above the 200-day MA (¥14.20), indicating a bullish trend. The 100-day MA (¥14.45) acts as a dynamic support. The price crossing above the 50-day MA in late August confirms short-term strength, but the 200-day MA may offer a final line of defense if the trend weakens. A close below ¥14.40 could trigger a retest of the ¥13.70–13.90 support zone, aligning with the 200-day MA.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, reinforcing momentum. The KDJ indicator shows %K (85.2) and %D (78.4) in overbought territory, suggesting a potential near-term correction. However, the divergence between the bullish MACD and overbought KDJ highlights caution—price may consolidate before resuming the uptrend if volume remains robust.

Bollinger Bands

The bands have expanded following the breakout, with the price near the upper band (¥15.20). This suggests heightened volatility and a potential continuation of the rally. A pullback to the 20-day MA (¥14.75) could trigger a bounce, but a breach below the lower band (¥14.40) would invalidate the bullish case.

Volume-Price Relationship

The recent surge was accompanied by a 30% increase in volume compared to the previous session, validating the move. However, volume has since declined, indicating waning follow-through. Sustained buying above ¥14.80 would require renewed volume, while a drop below ¥14.50 with shrinking volume could signal exhaustion.

Relative Strength Index (RSI)

The RSI stands at 72, entering overbought territory. While this suggests a short-term pullback is likely, the RSI has remained above 60 for most of August, reflecting strong momentum. A drop below 50 would confirm a bearish reversal, but a rebound above 60 would reinforce the bullish trend.

Fibonacci Retracement

From the recent low (¥13.50) to the high (¥14.80), key retracement levels at 61.8% (¥14.25) and 38.2% (¥14.55) are currently acting as support and resistance. A break above ¥14.80 could target ¥15.15 (78.6% level), while a failure to hold ¥14.55 would likely see a test of ¥14.25.

Backtest Hypothesis

A strategy of buying MUFG when RSI dips below 30 has historically outperformed the benchmark, generating a 36.84% return (vs. 30.63%) with a 9.35% CAGR. This aligns with the current technical setup, where the price is near key support and the RSI is in overbought territory. However, the strategy’s max drawdown of 0.00% suggests limited historical downside risk, though recent volatility (29.73% annualized) warrants caution. The confluence of bullish candlesticks, strong volume, and moving average alignment increases the probability of a sustained rally, but a divergence in KDJ and overbought RSI caution against overextending the position.