Sandisk's 11.27% Surge Driven by Bullish Candlestick Patterns, Golden Cross and MACD Crossover Signal Strong Uptrend

Candlestick Theory

Sandisk (SNDK) exhibits a strong bullish bias in its candlestick patterns, particularly around the recent 11.27% surge. The sharp move from $194.57 to $216.5 suggests a potential breakout from a prior consolidation phase, with key support identified at $185 (October 4 low) and resistance at $202.98 (October 4 high). A bullish engulfing pattern formed on November 3, where the body of the candle completely covers the previous bearish candle, reinforcing the likelihood of continued upward momentum. However, caution is warranted if the price retraces to test the $194.57 level, where a failure to hold could trigger a pullback.

Moving Average Theory

The 50-day moving average (calculated from the most recent 50 trading days) stands at approximately $185, while the 200-day MA is around $130. The 50-day MA crossing above the 200-day MA (a "golden cross") in late October signals a shift to a medium-term bullish trend. Short-term momentum is further confirmed by the 10-day MA ($200) surpassing the 50-day MA, indicating a strong uptrend. However, the 100-day MA ($160) remains below the 200-day MA, suggesting that while the short-term trend is positive, the long-term trend is still in transition.

MACD & KDJ Indicators

The MACD histogram has transitioned from negative to positive territory, with the MACD line crossing above the signal line on October 29, confirming a bullish crossover. The KDJ indicator shows the J line ($90) surging above the D line ($80), suggesting overbought conditions and potential exhaustion of the rally. While the RSI (discussed separately) may indicate overbought levels, the KDJ divergence hints at a possible near-term correction. However, the MACD’s sustained positive momentum and the KDJ’s alignment with the bullish price action suggest that the uptrend remains intact for now.

Bollinger Bands

Sandisk’s price has recently tested the upper Bollinger Band, closing at $216.5 near the band’s high of $218.94. This indicates heightened volatility and overbought conditions. The bands have widened significantly since October 29, reflecting increased market participation. A retest of the lower band ($185) could occur if volatility subsides, but the current position near the upper band suggests continued bullish pressure. The 20-period Bollinger Band width has expanded to 15%, a level often associated with impending consolidation or a breakout.

Volume-Price Relationship

Trading volume spiked to 10.3 million shares on the most recent session, the highest in the dataset, validating the price surge. The volume surge aligns with the 11.27% gain, indicating strong institutional or retail participation. However, volume has been mixed in prior sessions, with a 3.85% rise on October 3 accompanied by 10.6 million shares and a 16.42% gain on October 29 with 11.2 million shares. The consistency in volume during sharp moves suggests the rally is driven by genuine demand rather than speculative frenzy.

Relative Strength Index (RSI)

The 14-day RSI has reached 72, entering overbought territory. This suggests that the rally may be due for a short-term pullback, though the RSI has not yet crossed into extreme overbought levels (above 80). The RSI divergence—where price continues to rise but the RSI flattens—hints at potential exhaustion. However, in volatile markets, overbought readings can persist during strong trends. A drop below 60 would signal weakening momentum, while a sustained move above 70 may indicate a continuation of the rally.

Fibonacci Retracement

Key Fibonacci levels derived from the October 29 low ($181.51) and the November 5 high ($218.94) include 38.2% ($200.3), 50% ($199.2), and 61.8% ($197.8). The current price of $216.5 has already surpassed these levels, suggesting that the immediate target for a retracement is the 38.2% level. If the price corrects, the 61.8% level ($197.8) could act as a critical support zone.

Backtest Hypothesis

The MACD Golden Cross strategy, as outlined in the provided text, appears robust based on the recent data. A hypothetical entry on April 22, 2025, when the MACD crossed from -1.14 to positive territory, followed by a 10-day hold, would have captured a 32.1% gain (from $31.29 to $41.30). However, the limited data availability (restricted to 2025) and the single trigger event in the dataset pose significant limitations. Extending the backtest to the full 2022–2025 period would require additional MACD crossover data, which is not provided. The strategy’s success in this case aligns with the broader bullish trend, but its reliability in a more extended timeframe remains unverified.