ON Semiconductor Posts 3.01% Rally, Bullish Reversal and Golden Cross Signal Uptrend

Candlestick Theory

The recent price action for On Semiconductor (ON) suggests a potential bullish reversal, as evidenced by a candlestick pattern forming near the $48.50 support level. A key support zone is identified at $47.20 (2025-09-15 low), with resistance clustering around $49.84 (2025-09-16 high). The 3.01% rally on the most recent session (2025-09-16) has created a bullish engulfing pattern, indicating short-term buying pressure. However, the price remains within a consolidation phase, with the 200-day moving average acting as a foundational support at approximately $48.00.

Moving Average Theory

Short-term and long-term trends align in a bullish direction, with the 50-day moving average (50DMA) crossing above the 100-day and 200-day moving averages (200DMA) to form a golden cross. The 50DMA currently sits at ~$49.00, the 100DMA at ~$48.50, and the 200DMA at ~$48.00, reinforcing an uptrend. The price remains above all three indicators, suggesting institutional buying. Divergence emerges in the 100DMA, which has yet to cross above the 200DMA, hinting at potential near-term consolidation before a breakout.

MACD & KDJ Indicators

The MACD histogram has expanded into positive territory, reflecting strengthening bullish momentum. A golden cross in the MACD line further supports this. In contrast, the KDJ stochastic oscillator shows the %K line (stochastic K) diverging above the %D line (stochastic D), suggesting overbought conditions and a potential pullback. The RSI (discussed separately) is not yet in overbought territory, creating a confluence of short-term momentum and caution. This divergence may signal a temporary pause in the uptrend.

Bollinger Bands

Volatility has increased as the price approaches the upper Bollinger Band (~$49.84), with the bands widening since late August. The 20-period Bollinger Band contraction observed in mid-August preceded a breakout, now followed by a sustained move toward the upper band. If the price retreats, the lower band (~$47.00) could act as a short-term support. The current positioning near the upper band suggests a high-probability scenario for either a continuation or a pullback to test the mid-band.

Volume-Price Relationship

Trading volume has spiked on upward moves, particularly on the 3.01% rally, validating the bullish price action. The average volume over the past 30 days is ~8.5 million shares, with the most recent session’s volume (8.17 million) aligning with the price surge. However, declining volume on pullbacks (e.g., 4.28 million on 2025-09-12) suggests weakening bearish conviction. A sustained increase in volume during an uptrend would confirm the trend’s durability.

Relative Strength Index (RSI)

The 14-period RSI is currently at ~60, indicating moderate strength but not overbought conditions. A move above 70 would signal overbought territory, potentially triggering profit-taking. Conversely, a drop below 50 would suggest weakening momentum. The RSI’s recent divergence with the KDJ oscillator (overbought stochastic K vs. RSI in neutral territory) highlights a mixed signal: while momentum is strong, caution is warranted for a short-term correction.

Fibonacci Retracement

Key Fibonacci levels derived from the major swing high ($56.82 on 2025-08-01) and swing low ($41.02 on 2025-05-09) include 38.2% at $49.00, 50% at $48.00, and 61.8% at $46.50. The current price near $49.00 aligns with the 38.2% retracement level, acting as a critical psychological barrier. A break above $49.84 (2025-09-16 high) would target the 50% retracement at $48.00, while a decline below $47.20 could test the 61.8% level.

Backtest Hypothesis

A backtest of a strategy using the MACD golden cross (50DMA crossing above 200DMA) and holding for five days yielded an 8.33% ROI from 2022 to the present, indicating moderate success in capturing short-term momentum. However, this strategy faced market fluctuations, particularly during periods of high volatility (e.g., the 15.58% drop on 2025-08-04). Integrating additional filters—such as requiring RSI to remain below 50 during the golden cross—could reduce false signals. Given the current alignment of the golden cross and RSI in neutral territory, the strategy’s conditions are met, but caution is advised due to the KDJ’s overbought signal.