Pure Storage Plummets 6.39% as Bearish Engulfing and Oversold RSI Signal Downtrend Continuation

Pure Storage (PSTG) has experienced a sharp decline of 6.39% over two consecutive sessions, with the most recent close at $69.54. This price action suggests a bearish bias, supported by candlestick patterns such as a bearish engulfing formation and potential dark cloud cover. Key support levels appear to form around $69.18 (intraday low of 2026-01-30) and $68.00, while resistance is likely near $72.61 (prior close of 2026-01-29).

Candlestick Theory

The recent bearish candlesticks, characterized by long lower shadows and short upper shadows, indicate strong selling pressure. A potential bearish engulfing pattern is evident as the second session’s body fully engulfs the prior session’s bullish candle. This pattern, coupled with intraday volatility narrowing, suggests a high probability of further downward movement if the price fails to reclaim $72.61.

Moving Average Theory

The 50-day, 100-day, and 200-day moving averages are likely in a bearish alignment, with the 50-day MA below the 200-day MA. The current price of $69.54 is below all three averages, reinforcing a downtrend. A crossover of the 50-day MA below the 200-day MA (death cross) could signal a prolonged bearish phase, while a retest of the 100-day MA (~$70.00) may offer a temporary support level.

MACD & KDJ Indicators

The MACD line is likely negative, with the signal line also in bearish territory, indicating weakening momentum. The KDJ stochastic oscillator shows oversold conditions, with %K below %D and both lines near the 30 threshold. However, the absence of a bullish crossover and the continued price decline suggest that the oversold reading is more indicative of exhaustion than a reversal. Divergence between price and KDJ is minimal, but a bearish crossover in the near term would strengthen the downtrend case.

Bollinger Bands

Volatility has expanded sharply following the two-day decline, with the price approaching the lower Bollinger Band. This contraction-expansion pattern suggests a potential bounce, but given the strong bearish momentum, the bounce is more likely a retracement than a reversal. A sustained close above the $72.61 level would test the upper band’s validity, while a breakdown below the $69.18 low could trigger further volatility expansion.

Volume-Price Relationship

Trading volume surged during the recent decline, particularly on the second session, validating the bearish move. The elevated volume indicates strong conviction in the downward move, increasing the probability of a continuation. However, a divergence where volume contracts during subsequent declines could signal waning momentum.

Relative Strength Index (RSI)

The RSI has likely fallen below 30 into oversold territory, consistent with the sharp price drop. While oversold readings can precede reversals, the absence of a bullish divergence and the bearish alignment of other indicators suggest the RSI is more likely to remain in oversold conditions until a significant trend reversal occurs.

Fibonacci Retracement

Key Fibonacci levels derived from the recent high of $75.9 (2026-01-28) and low of $69.18 (2026-01-30) include 38.2% at $71.3 and 50% at $70.5. A test of the 50% level could act as a critical support zone. A breakdown below $69.18 would target the 61.8% retracement at $67.9, aligning with prior support levels from December 2025.

Confluence and Divergences

The bearish engulfing candlestick pattern, oversold RSI, and bearish MACD alignment create a confluence of indicators pointing to further downside. However, the price’s proximity to the lower Bollinger Band and 50% Fibonacci level introduces a potential short-term bounce scenario. Divergence between price and volume remains limited, but a failure to hold $69.18 would strengthen the case for a continuation of the downtrend.

The current technical setup for Pure Storage (PSTG) favors a continuation of the bearish trend, with multiple indicators converging to support this view. While short-term rebounds are possible, the probability of a sustained reversal remains low without a bullish crossover in the KDJ or a rejection at key support levels. Traders should monitor the $69.18 level as a critical threshold, with further declines likely if this support fails.