Regeneron Shares Signal Downturn: Bearish Engulfing Pattern Targets $549.2 Support Amid Bearish MA Alignment

Candlestick Theory

Regeneron’s recent price action on October 10, 2025, formed a bearish engulfing pattern, with a large bearish body surpassing the preceding bullish candle’s high of $569.9. This suggests a potential short-term reversal to the downside. Key support levels emerge at $555.54 (October 10 low) and $549.2 (September 25 low), while resistance is clustered near $569.9 (October 9 high). A breakdown below $555.54 could target the next support at $549.2, with a bearish continuation likely if the price closes below this level.

Moving Average Theory

The 50-day moving average (approx. $580) and 100-day MA ($600) currently lie above the 200-day MA ($650), forming a bearish alignment. The price has remained below the 50-day MA for three consecutive sessions, indicating short-term bearish momentum. However, the 200-day MA’s steep decline since July 2025 suggests long-term bearish exhaustion may be approaching. A crossover above the 50-day MA would signal a potential short-term rally, while a break below $550 (a 100-day MA support) could accelerate the downtrend.

MACD & KDJ Indicators

The MACD histogram has contracted from -15 to -5 over the past week, indicating weakening bearish momentum. The KDJ indicator shows the K line (stochastic %K) at 10, far below the D line (stochastic %D at 30), suggesting oversold conditions. However, a divergence exists between the KDJ and RSI: while KDJ hints at a potential bounce, the RSI (51.69) remains in neutral territory. This incongruence implies caution—oversold readings may not translate to a strong reversal without confirmation from volume or price action.

Bollinger Bands

The price has tested the lower Bollinger Band ($555.54) twice in the past week, with volatility expanding as the bands widen. A breakout below the lower band could target $549.2, while a rebound above $569.9 (the upper band) would signal a potential consolidation phase. The bands’ expansion aligns with the bearish engulfing pattern, reinforcing the likelihood of continued downward pressure.

Volume-Price Relationship

Volume spiked on the October 10 decline (1.495M shares), validating the bearish move. However, volume has since declined to 853K shares on October 9, suggesting weakening conviction in the downtrend. A sustained increase in volume on further declines could confirm bearish exhaustion, while a volume spike on a rebound would indicate short-covering or a potential reversal.

Relative Strength Index (RSI)

The RSI (51.69) is neither overbought nor oversold, but its recent decline from 66.43 to 51.69 suggests weakening momentum. A move below 30 would trigger an oversold signal, but this must be validated by other indicators. The RSI’s alignment with the KDJ’s oversold condition hints at a possible bounce, though the lack of a bearish divergence (price new lows without RSI new lows) weakens the case for a reversal.

Fibonacci Retracement

Applying Fibonacci levels to the recent $555.51 to $615.39 rally, key retracement levels at 38.2% ($570) and 61.8% ($545) coincide with existing support/resistance clusters. A breakdown below $545 would target the next level at $535, aligning with the March 2025 low. A retest of $570 could trigger a countertrend rally, but confirmation above $570 is needed to invalidate the bearish case.

Backtest Hypothesis

The backtest strategy, based on RSI overbought (above 70) entries and oversold (below 60) exits, yielded a -19.47% return from 2022–2025, underperforming the -10.7% buy-and-hold return. This aligns with the current analysis, where prolonged overbought conditions (e.g., RSI above 70 for 12 months in 2022–2023) led to a large loss when the price corrected. The strategy’s failure underscores the risk of relying solely on RSI in volatile biotech stocks like Regeneron. Integrating RSI with Bollinger Bands (e.g., entries at RSI 70 + price near upper band) or KDJ divergence could improve efficacy. However, the current confluence of bearish candlesticks, moving averages below, and RSI neutrality suggests continued downside potential, making the strategy’s rigid RSI thresholds less optimal.