On Semiconductor Soars 19.66% In 3 Days On Heavy Buying Volume

On Semiconductor (ON) concluded its most recent session with a significant 6.14% gain, closing at $50.28. This marks the third consecutive day of substantial gains, resulting in a cumulative 19.66% price increase over this period, driven by strong buying interest evident in the high volumes recorded.
Candlestick Theory
The price action features a powerful bullish sequence over the last three sessions. June 3rd formed a large green candle (11.35% gain) on high volume, signaling strong accumulation after basing near $41.63 (support from the May 30th low). June 4th followed with another large bullish candle, closing near its high ($50.28). This pattern near the $50-$51 level resembles a bullish breakout, establishing $47.72 (June 4th low) as immediate support and $51.10 (June 4th high) as initial resistance. A confirmed close above $51.10 would open the path towards the February peak resistance near $53.40. The magnitude of these candles underscores significant buying pressure.
Moving Average Theory
Calculating key moving averages reveals evolving trends. The 200-day moving average (long-term trend) resides around $61.57, well above the current price, indicating the stock remains in a longer-term downtrend from its 2024 highs. However, the shorter-term dynamics are shifting bullishly: the 50-day MA ($45.23) has provided a springboard for the recent rally, and the price has decisively broken above it. The 100-day MA ($50.18) is being challenged at the current close ($50.28). Sustained trading above the 100-day MA would be a significant positive development. The gap between the rising 50-day MA and the flatter 100-day MA suggests potential for a bullish Golden Cross formation, though it is not yet confirmed.
MACD & KDJ Indicators
The MACD histogram has turned positive and is rising sharply after the signal line crossover occurred during the initial surge, confirming the strengthening bullish momentum. The KDJ oscillator also reflects the rapid ascent: The %K line has surged from oversold territory below 20 in late May to cross above the %D line and is now climbing towards the overbought zone above 80. The %D line is following upwards. While this indicates strong positive momentum, the KDJ entering overbought territory raises a cautionary flag about potential near-term exhaustion or profit-taking as the move extends, especially without consolidation.
Bollinger Bands
Bollinger Bands have undergone significant contraction (squeeze) around the $42-$43 level in late May, preceding the explosive move higher. This compression indicated a period of low volatility often resolved by a strong directional move. The subsequent upside breakout caused the bands to expand dramatically. Price is currently pushing against the Upper Band ($~$50.80 based on recent volatility). While touching the upper band can sometimes signal overbought conditions, in the context of a strong momentum breakout, it often signals continuation. A consolidation phase holding above the middle band (20-period MA, ~$46.50) would confirm bullish control.
Volume-Price Relationship
The volume profile provides strong validation for the recent price surge. The breakout days (June 3rd and 4th) recorded the highest volumes in the dataset (24.13M and 28.17M shares respectively). This high-volume advance signifies strong conviction behind the buying. Conversely, down days preceding the rally (e.g., May 23rd, 30th) saw notably lower volume, suggesting a lack of strong selling conviction. This divergence – high volume on up days, lower volume on down days – is a classic hallmark of a sustainable uptrend, increasing confidence in the breakout's legitimacy.
Relative Strength Index (RSI)
The 14-day RSI has catapulted from near oversold levels (approaching 30 in late May) to currently stand well above 70 (approximately 76.5 based on recent closes and gains). This firmly places the RSI in overbought territory on the daily timeframe. While overbought RSI readings often precede pullbacks or consolidations, it's crucial to note they can persist during powerful trending moves. A slight bearish divergence was noted on June 4th: the price made a higher high compared to June 3rd, but the RSI registered a marginally lower high. This divergence warrants caution despite the strong upward price momentum.
Fibonacci Retracement
Applying Fibonacci retracement to the significant decline from the March peak of $50.76 to the May trough of $37.19 identifies key potential resistance and support zones. The 61.8% retracement level lies near $45.45. This level was decisively overcome during the initial surge (June 3rd), turning it into a new major support level. The next critical Fibonacci hurdle is the 76.4% retracement near $48.14. The stock closed well above this level at $50.28. Breaking above the 76.4% level significantly increases the probability of a full retracement towards the prior peak around $50.76 and potentially beyond. The recent close above $48.14 is technically bullish for this continuation.
Confluence and Divergence Synthesis
Significant confluence supports the $45.45-$46.50 zone as strong support, backed by the Fibonacci 61.8% retracement, the rising 50-day moving average, and the Bollinger Band midpoint. A successful test of this area could offer favorable long entry points. The breakout above the 76.4% Fib level ($48.14) and challenge of the 100-day MA ($50.18) are key bullish technical achievements. The primary divergence of concern is the minor bearish divergence observed in the RSI against price on the most recent up day, occurring near the prior peak resistance and alongside overbought readings on RSI and KDJ. While volume confirms the upward momentum, the combination of overbought oscillators, price nearing prior swing highs ($50.76), and slight RSI divergence warrants vigilance for potential near-term consolidation or pullback despite the overwhelmingly bullish short-term structure.