Seagate Technology shares jump 7.72% as technical indicators signal bullish momentum

Seagate Technology (STX) has experienced a significant 7.72% surge in its most recent trading session, indicating strong short-term bullish momentum. This sharp price action, coupled with the historical data spanning nearly a year, provides a robust foundation for a multi-faceted technical analysis. Below, we dissect the stock’s behavior through various analytical lenses to identify key drivers, potential risks, and confluence points.

Candlestick Theory

The recent 7.72% rally forms a bullish engulfing pattern, suggesting a reversal from prior bearish sentiment. Key support levels are evident at $193.04 (August 9 low) and $183.98 (August 4 close), while resistance is clustered around $211.12 (September 15 high) and $214.20 (September 15 high). A breakdown below $193.04 could trigger a retest of the $183.98 level, whereas a sustained close above $214.20 may signal a continuation of the upward trend. The formation of a "hanging man" pattern on August 8 (low-volume bearish signal) and a "shooting star" on July 31 (high-volume overextension) suggests caution for potential pullbacks.

Moving Average Theory

The 50-day moving average (approximately $180–$190 range) has acted as a dynamic support, currently being outpaced by the 100-day ($175–$185) and 200-day ($160–$170) averages. This "golden cross" scenario, where shorter-term averages rise above longer-term ones, confirms an uptrend. However, the 200-day MA’s lagging nature suggests the trend may still be in its early stages. A break below the 50-day MA would invalidate the bullish case, while a cross above the 100-day MA could accelerate momentum.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence in recent weeks, with the line crossing above the signal line, reinforcing bullish momentum. However, the KDJ (Stochastic) indicator indicates overbought conditions (K-line above 80), suggesting a potential pullback. A bearish crossover in the KDJ (K < D) could precede a correction, though confluence with the MACD’s strength may delay this. Divergence between RSI and KDJ readings (RSI overbought while KDJ peaks) highlights caution for near-term volatility.

Bollinger Bands

Volatility has expanded in recent weeks, with the upper band reaching $214.20 and the lower band tightening near $193.04. Price proximity to the upper band suggests overbought conditions, but the bands’ recent expansion indicates sustained momentum. A contraction in band width, if observed, may precede a breakout or breakdown. The stock’s current position near the upper band aligns with the bullish engulfing pattern, but a close below the middle band ($199.65–$201.12 range) would signal weakening momentum.

Volume-Price Relationship

The recent 7.72% rally was accompanied by a surge in volume (7.4 million shares), validating the move’s strength. However, volume has trended lower in subsequent sessions, raising concerns about waning conviction. A divergence between price highs and declining volume may indicate a potential stall in the uptrend. Conversely, a surge in volume on a breakdown below $193.04 could confirm bearish exhaustion, while a breakout above $214.20 on high volume would strengthen the bullish case.

Relative Strength Index (RSI)

The RSI has spiked into overbought territory (above 70), aligning with the recent rally. While this typically signals a potential correction, the stock’s strong volume and MACD divergence suggest the uptrend may persist. A drop below 60 would indicate weakening momentum, but a failure to break below 70 would reaffirm bullish momentum. Cautious traders may note the RSI’s historical tendency to remain overbought during strong trends, limiting its reliability as a standalone sell signal.

Fibonacci Retracement

Key Fibonacci levels from the May 2024 low ($85.01) to the July 2025 high ($157.45) include 61.8% at $133.08 and 78.6% at $147.42. The current price of $211.12 exceeds these levels, suggesting a potential extension phase. A retest of the 78.6% level ($147.42) could trigger a secondary rally, while a breakdown below the 61.8% level may indicate a deeper correction.

Backtest Hypothesis

The backtest strategy of buying STX when RSI is overbought (above 70) and selling when it falls below 70 from 2022 to present resulted in significant losses, as noted. This failure underscores the limitations of RSI in trending markets, where overbought conditions may persist rather than trigger corrections. For instance, during the July–August 2025 rally, RSI remained above 70 for weeks despite continued price gains, invalidating the sell signal. Conversely, the strategy’s reliance on a fixed threshold (70) ignored confluence with other indicators—such as MACD divergence and volume trends—that could have extended holding periods during strong uptrends. Integrating multiple signals (e.g., combining RSI with Bollinger Bands and volume) might have improved outcomes, but the strategy’s rigidity highlights the importance of adaptive frameworks in volatile markets.