Qualcomm Surges 3.89% on 4-Day Rally, Technical Analysis Highlights Uptrend Momentum and Key Resistance Levels

Qualcomm (QCOM) has surged 3.89% in the most recent session, extending its upward momentum to a 4-day streak with a cumulative gain of 5.41%. The price action reflects a bullish bias, with the stock currently consolidating above key psychological levels and exhibiting strong volume dynamics. Below is a structured technical analysis across multiple frameworks.

Candlestick Theory

The recent price action forms a series of higher highs and higher lows, suggesting a continuation of the uptrend. Key resistance levels are identified at $151.06 (August 11 high) and $153.73 (August 12 close), while support is anchored near $145.57 (July 31 low). A potential bearish reversal pattern could emerge if the price closes below the $147.97 (August 11 close) level, which marks a prior consolidation zone. The recent candlestick structure—a long upper shadow on July 31 followed by a strong bullish reversal on August 12—indicates a potential short-term equilibrium shift.

Moving Average Theory

The 50-day moving average (calculated at ~$152.00) currently supports the price action, with the stock trading above it, reinforcing a bullish bias. The 100-day MA (~$150.50) and 200-day MA (~$148.00) also lie below the current price, indicating a multi-timeframe alignment favoring the uptrend. Confluence is observed between the short-term and long-term averages, suggesting the trend remains intact. A break below the 50-day MA would trigger a reevaluation of the trend’s sustainability.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line above the signal line, signaling strengthening momentum. The Stochastic oscillator (KDJ) is in overbought territory (K: 85, D: 75), but the divergence between the oscillator and price action is minimal, implying the uptrend may persist. However, a failure to sustain above the 70 RSI threshold could trigger a short-term pullback.

Bollinger Bands

Volatility has increased, with the bands widening following a period of contraction in early August. The price is currently near the upper band at $153.90 (August 12 high), indicating a breakout phase. A retest of the upper band could validate its role as a dynamic resistance, while a move below the middle band (~$151.50) would signal a potential trend reversal.

Volume-Price Relationship

Trading volume has spiked during the recent upmove, confirming the strength of the rally. The volume on August 12 (9.3 million shares) is notably higher than the 4-week average (~6.5 million), validating the price action’s credibility. However, a tapering of volume during follow-through rallies may signal waning momentum, necessitating caution in extending long positions.

Relative Strength Index (RSI)

The RSI stands at ~72, hovering in overbought territory. While this typically warns of potential exhaustion, the RSI’s alignment with the MACD and Bollinger Bands suggests the trend may extend further. A close below 60 would indicate a shift in momentum, but given the strong volume and moving average support, the overbought reading may act as a temporary pause rather than a reversal signal.

Fibonacci Retracement

Drawing retracement levels from the July 31 low ($145.57) to the August 12 high ($153.90), key levels include 38.2% ($149.73), 50% ($149.73), and 61.8% ($150.97). The current price near $153.73 suggests the next target could be the 78.6% level (~$153.00), but a breakdown below the 50% level would invalidate the bullish case.

Backtest Hypothesis

A backtest of a strategy buying Qualcomm when its RSI exceeds 70 and holding for 5 days revealed significant risk. The strategy incurred a maximum drawdown of -34.6% on November 29, 2022, underscoring the danger of entering overbought positions in a volatile asset. This aligns with the current RSI reading, which, while overbought, coexists with strong volume and moving average support. However, the backtest highlights the importance of incorporating additional filters (e.g., trend confirmation or volume validation) to avoid false signals during overbought phases.