NIKE Shares Signal Deepening Bearish Momentum as Key Support Looms at 71.00 After 3.54% Drop

Candlestick Theory

NIKE’s recent price action exhibits bearish signals, with a large bearish candle closing near the lower end of the range (71.93), suggesting strong selling pressure. Key support levels emerge at 71.00–71.50 (implied by recent consolidation) and 69.00 (prior intraday lows in late September), while resistance is clustered around 73.00–74.50 (prior highs from late August and early September). A breakdown below 71.00 could trigger a test of the 68.00–69.00 zone, where prior support-turned-resistance may reassert itself.

Moving Average Theory

Short-term dynamics show the 50-day MA (~73.00) currently above the 200-day MA (~75.50), indicating a bearish crossover. The 100-day MA (~74.00) aligns with the 50-day, reinforcing a downtrend. Price remains below all major MAs, signaling bearish momentum. However, the 200-day MA’s slight upward drift suggests long-term buyers may re-enter near 71.00, creating potential confluence with Fibonacci retracement levels.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the line crossing below the signal line, confirming bearish momentum. The KDJ indicator shows oversold conditions (K: 28, D: 32), but the stochastic lines are diverging—K failing to rise despite a rebound in price. This divergence suggests weak follow-through buying, increasing the likelihood of further declines before a potential reversal.

Bollinger Bands

Volatility has expanded, with the bands widening from a prior contraction in mid-September. The current close sits near the lower band, reinforcing oversold conditions. If the 71.00 support holds, a bounce toward the mid-band (~73.00) is possible, but a breakdown below 71.00 would signal renewed bearish expansion.

Volume-Price Relationship

Volume spiked during the recent 3.54% drop, validating the bearish move. However, volume has since declined, suggesting waning momentum. A sustained increase in volume during a rebound would strengthen the case for a short-term bottom, while fading volume on rallies could confirm a deeper downtrend.

RSI

The RSI (14-day) is at 30, entering oversold territory. While this may hint at a near-term bounce, caution is warranted due to the prolonged downtrend and lack of divergence in price-volume action. Oversold readings in a strong downtrend often fail to trigger reversals without additional catalysts.

Fibonacci Retracement

Key retracement levels from the August high (~79.00) to the September low (~68.00) include 74.00 (38.2%), 71.00 (50%), and 68.00 (61.8%). The current price near 71.93 aligns with the 50% retracement level, which has historically acted as a pivot point. A close below 71.00 could target the 68.00 level, where prior support may retest buyers.

Backtest Hypothesis

The proposed strategy of selling NIKE when RSI exceeds 70 (overbought) is inapplicable to the current data, as the RSI has not breached 70 since late 2022. Backtesting from 2022 to 2025 reveals no instances where RSI exceeded 70, with the highest reading at 61.39 in December 2022. This suggests the overbought condition is rarely met, rendering the strategy ineffective. The stock’s prolonged downtrend and consistently bearish momentum imply that alternative signals—such as oversold bounces or Fibonacci retracements—may yield better results.