Nu Holdings 9.08% Rally Sparks Bullish Engulfing Pattern and Golden Cross Amid Overbought RSI and Conflicting Indicators

Candlestick Theory

Nu Holdings' recent price action reveals a sharp 9.08% rally on August 15, forming a bullish engulfing pattern against the prior day's bearish candle. This suggests strong buying pressure breaking through a prior consolidation range. Key support levels are identified at $12.00 (August 14 close) and $11.89 (August 11 low), while resistance appears at $12.32 (August 14 high) and $12.59 (August 8 high). A breakdown below $11.89 could trigger further bearish momentum, but the recent volume surge validates the bullish reversal.

Moving Average Theory

Short-term momentum favors Nu Holdings, with the 50-day MA (calculated as ~$12.70) crossing above the 200-day MA (~$12.30), signaling a bullish "golden cross." The 100-day MA (~$12.50) reinforces this trend. However, the 200-day MA remains a critical psychological barrier; sustained trading above $13.10 (August 15 close) would confirm a medium-term uptrend. Divergence between the 50-day and 200-day MAs may indicate potential volatility if the 50-day MA stalls near $12.70.

MACD & KDJ Indicators

The MACD histogram shows a recent positive divergence, with the line crossing above the signal line on August 15, confirming bullish momentum. The KDJ stochastic oscillator, however, indicates overbought conditions (K-line at 85, D-line at 78), suggesting a potential pullback. A bearish crossover in KDJ could precede a correction to the $12.00 support level. While MACD supports continuation, the KDJ overbought warning highlights a possible short-term reversal risk.

Bollinger Bands

Volatility has expanded sharply following the August 15 rally, with the price surging to the upper band at $14.07. This contraction-expansion pattern suggests a breakout rather than a false move. The 20-day Bollinger Band width now exceeds 1.5%, indicating heightened volatility. A retest of the lower band ($11.89–$12.01) could occur, but the recent volume surge suggests the upper band may act as a new support level if the rally consolidates.

Volume-Price Relationship

The August 15 session’s trading volume (130.5 million shares) is 2.1x the 30-day average, validating the bullish breakout. However, volume has declined in subsequent sessions (e.g., 62.4 million on August 14), which may indicate waning momentum. A follow-through increase in volume on a new high would strengthen the bullish case, while declining volume could signal a distribution phase.

Relative Strength Index (RSI)

The 14-day RSI reached 75 on August 15, entering overbought territory. While this typically warns of a correction, historical context is critical: Nu Holdings has shown resilience in overbought conditions, with the RSI remaining above 65 for five consecutive days. A drop below 60 would confirm a bearish turn, but divergence between rising prices and flattening RSI suggests caution.

Fibonacci Retracement

Key Fibonacci levels from the May–August rally (low: $10.24, high: $14.68) include 61.8% at $13.10 and 78.6% at $12.85. The recent close at $13.1 aligns with the 61.8% retracement level, acting as a potential resistance. A breakout above this level would target the 78.6% level at $12.85, but failure to hold $13.10 may trigger a retest of the 38.2% level at $11.90.

Backtest Hypothesis

The backtest strategy targets stocks in RSI overbought conditions, historically yielding negative returns (-0.04% max). Applying this to Nu Holdings, the current RSI of 75 suggests a bearish bias, aligning with the KDJ overbought warning. However, the recent bullish engulfing pattern and strong volume contradict this signal, creating a confluence of conflicting indicators. A probabilistic approach would suggest entering short positions with tight stops above $13.10, while acknowledging the risk of continued bullish momentum if volume remains robust.