Nike (NKE) Rises 0.50% in Fifth Consecutive Day of Gains Up 7.70% in Week

NIKE (NKE) has seen a 0.50% rise in the most recent session, extending its upward momentum for five consecutive days with a 7.70% cumulative gain. This sustained move suggests short-term bullish momentum, but the analysis must contextualize this within broader technical frameworks to assess sustainability and potential reversals.

Candlestick Theory

Recent price action reveals a series of higher highs and higher lows, forming a bullish continuation pattern. Key support levels are identified at prior troughs, such as the 68.82–70.20 range from early September, while resistance is clustered near 74.69–76.97 (October 1–2 highs). A potential bearish reversal could emerge if the price fails to hold above 73.88, the recent low from October 2, which has acted as a dynamic support. Conversely, a break above 74.69 may confirm a new short-term trend.

Moving Average Theory

The 50-day moving average (approximately 73.5) currently sits above the 100-day (72.5) and 200-day (71.5) averages, forming a "Golden Cross" that underscores bullish momentum. The 50-day line is also approaching the 74.57 level, aligning with recent price action. However, the 200-day MA, a critical long-term trend indicator, remains below the current price, suggesting intermediate-term strength but not an entrenched uptrend. A sustained close below the 50-day MA could invalidate the short-term bullish case.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line crossing above the signal line, reinforcing the bullish bias. The KDJ Stochastic oscillator (typically interpreted as a momentum oscillator) shows overbought conditions (levels near 80), raising caution about near-term exhaustion. Divergence between the KDJ’s overbought readings and the MACD’s bullish signals suggests a potential pullback, though the MACD’s strength may delay a reversal.

Bollinger Bands

Volatility has expanded in recent sessions, with the price trading near the upper band (76.97–74.57). This proximity to the upper band, combined with the RSI (discussed below), signals overbought conditions. A contraction in the bands could precede a consolidation phase, but the current position near the upper boundary implies continued upward pressure until a reversal pattern emerges.

Volume-Price Relationship

Trading volume has increased in tandem with the price rise, validating the uptrend’s strength. The recent five-day volume surge (e.g., 26.25 million shares on October 2) supports the sustainability of the rally. However, if volume begins to taper while the price remains elevated, it may indicate weakening conviction among buyers.

Relative Strength Index (RSI)

The RSI is currently near 75, indicating overbought conditions. While this does not guarantee an immediate reversal, it signals a heightened risk of a pullback. A drop below 50 would confirm bearish momentum, while a rebound above 60 could extend the rally.

Fibonacci Retracement

Drawing retracement levels from the October 1 high (74.69) to the September 30 low (68.82) identifies key levels: 61.8% at 73.00 and 50% at 71.75. The current price near 74.57 is close to the 61.8% level, which could act as a pivot point. A break above 74.69 would target the 76.97 high, while a retest of 73.00 may trigger a consolidation phase.

Backtest Hypothesis

The proposed strategy combines MACD Golden Cross, KDJ Golden Cross, and RSI overbought signals for entry, with a 10-day holding period. Historical backtests (2022–2025) reveal a strategy return of 9.30% versus the benchmark’s 43.50%, yielding an excess return of -34.20%. This underperformance highlights limitations: the strategy relies heavily on MACD, which may not account for divergences in KDJ or RSI. Additionally, the 10-day horizon may not align with NIKE’s typical price behavior, which exhibits longer-term trends. Refinements, such as incorporating Fibonacci levels or adjusting the holding period to 15–20 days, could improve alignment with the stock’s volatility patterns.