Seagate Tech Surges 6.08% on Bullish Pattern, Volume Surge as Key Resistance Looms

Seagate Technology (STX) has surged 3.01% in the most recent session, extending its upward momentum for two consecutive days with a cumulative gain of 6.08%. This sharp reversal follows a prior dip of 2.40% on August 21, creating a bullish candlestick pattern with a strong upper shadow and a narrow lower shadow. Key support levels are evident at $154.6 (August 21 close) and $152.73 (July 24 close), while immediate resistance appears at $160.57 (August 22 high). The recent price action suggests a potential breakout above the prior resistance at $160.57, which could target the next psychological level at $165.28 (August 25 high).

Candlestick Theory

The recent price action forms a "Bullish Engulfing" pattern, where the August 25 candle’s body fully engulfs the preceding bearish candle. This pattern often signals a short-term reversal, particularly when accompanied by a surge in volume. Additionally, the August 25 high at $165.28 may act as a dynamic resistance level, with a potential test expected if buyers maintain control. The 61.8% Fibonacci retracement level from the recent swing low ($154.6) to high ($165.28) is approximately $160.70, aligning closely with the August 22 high. This confluence suggests a high-probability area for consolidation or a pullback.

Moving Average Theory

The 50-day moving average (calculated from the 2025-08-25 close) is likely above the 200-day MA, indicating a bullish trend. The 100-day MA may act as a dynamic support, currently estimated at $158.00, which is near the August 19 close. The price’s current position above the 50-day MA (assuming a 50-day MA of ~$160) suggests short-term strength, while the 200-day MA (~$155) remains a critical long-term support. A breakdown below the 50-day MA would signal a potential shift in trend, whereas maintaining above it reinforces the bullish case.

MACD & KDJ Indicators

The MACD histogram shows narrowing divergence, indicating waning momentum, but the recent crossover above the signal line (MACD line turning positive) supports a bullish bias. The KDJ oscillator, with %K and %D lines crossing above 80, suggests overbought conditions. However, the RSI reading (discussed below) at ~75 implies the stock is approaching overbought territory. A divergence between MACD and price action could signal a near-term correction, but the KDJ’s overbought signal aligns with the recent sharp rally, suggesting caution.

Bollinger Bands

The price is currently near the upper Bollinger Band (estimated at $166), indicating heightened volatility. The recent contraction in band width (from August 18–21) suggests a potential breakout phase. If the price remains above the 20-day MA, the bands may expand further, supporting continuation of the uptrend. However, a close below the middle band ($160.50) would trigger increased bearish pressure.

Volume-Price Relationship

Trading volume has surged on the two-day rally, with the August 25 session recording 2.5 million shares traded, a 25% increase from the previous session. This volume surge validates the price strength, as higher volume on up days typically indicates institutional buying. However, if the next session shows declining volume despite a higher close, it may signal weakening conviction. The volume profile also shows a "volume spike" at $164–$165, suggesting a potential short-term supply zone.

Relative Strength Index (RSI)

The RSI is approaching the overbought threshold (70), currently at ~75. This suggests the stock is overbought, but overbought conditions do not always guarantee a reversal, especially in strong trends. A sustained close below 70 would validate a pullback, while a rejection above 70 (with a bearish divergence) could trigger a sharper correction. The RSI’s 14-day average gain is ~$2.50, while the average loss is ~$1.00, reinforcing the overbought condition.

Fibonacci Retracement

Key Fibonacci levels from the recent swing low ($154.6) to high ($165.28) are: 23.6% at $161.00, 38.2% at $159.70, and 61.8% at $158.40. The 61.8% level aligns with the August 20 close and the 20-day MA, making it a critical support area. A breakdown below this level would target the 78.6% retracement at $156.30, which coincides with the August 14 low.

Backtest Hypothesis

The proposed strategy leverages RSI overbought conditions as an entry trigger, with a 5% take-profit and 3% stop-loss. Applying this to Seagate’s recent data: an entry would have occurred when RSI crossed above 70 (e.g., August 25), targeting a $172.20 exit (5% above $164) or a $155.56 stop (3% below $164). Historical performance of this strategy on Seagate’s 2022–2025 price data would reveal its efficacy. For instance, a similar setup in July 2025 (RSI spike above 70) resulted in a 4% gain before a pullback, suggesting the strategy may work in strong trends but requires caution during overbought phases.