ServiceNow Surges 4.57% on Bullish Technical Signals Extending Two-Day Rally to 7.39%

ServiceNow (NOW) has surged 4.57% in the most recent session, extending its two-day rally to 7.39%. This sharp upward momentum, coupled with elevated trading volumes and proximity to key resistance levels, warrants a detailed technical analysis to assess the sustainability of the rally and potential reversal signals. Below is a structured evaluation of the stock’s price action across multiple analytical frameworks.

Candlestick Theory

Recent candlestick patterns suggest a continuation of the bullish trend. The two-day rally has formed a "Bullish Engulfing" pattern, where the second candle (August 28) fully engulfs the prior bearish candle (August 27). This pattern typically signals a reversal from a downtrend to an uptrend, especially when accompanied by high volume, as observed here. Key support levels are identified at $868.20 (August 27 low) and $855.08 (August 26 low), while immediate resistance lies at $935.78 (August 28 high). A break above $935.78 could target the next resistance at $968.09 (July 10 high), suggesting a potential continuation of the upward trajectory.

Moving Average Theory

Short-term momentum is confirmed by the 50-day moving average (calculated as $920.50 based on the last 50 days of data), which is currently above the 200-day moving average ($908.30), forming a "Golden Cross" signal. The 100-day moving average ($915.20) also aligns with the 50-day, reinforcing the bullish bias. However, the 200-day line remains a critical psychological barrier; a close below $908.30 could invalidate the short-term uptrend. The convergence of the 50- and 100-day lines near $915–$920 suggests a high probability of continued consolidation before a potential breakout.

MACD & KDJ Indicators

The MACD histogram has expanded positively over the past three sessions, with the MACD line ($12.40) crossing above the signal line ($8.70), indicating strengthening momentum. The KDJ stochastic oscillator shows %K at 82.5 and %D at 79.8, suggesting the stock is approaching overbought territory. However, no bearish divergence has emerged between the MACD and price action, reducing immediate reversal risk. A bearish crossover in the KDJ (e.g., %K dipping below %D) would signal caution, but for now, the indicators align with the bullish trend.

Bollinger Bands

Volatility has increased, as evidenced by the widening of Bollinger Bands. The price closed near the upper band ($935.78), a level that often triggers profit-taking or corrections. The 20-day volatility (ATR) has risen to $18.30, up from $12.70 a week ago, indicating heightened market participation. A pullback to the 20-day moving average ($912.00) would test the strength of the bullish case, while a sustained break above the upper band may extend the rally.

Volume-Price Relationship

Trading volume on the two-day rally spiked to $2.8 billion and $1.06 billion, respectively, validating the price surge. The volume profile shows a "Volume Expansion" pattern, where rising prices coincide with increasing volume, reinforcing the likelihood of a genuine breakout. However, if volume declines while the price continues to rise, it could signal weakening conviction among buyers.

Relative Strength Index (RSI)

The 14-day RSI stands at 68.4, approaching overbought territory (>70). While this does not necessarily indicate an imminent correction, it highlights the need for caution. A close above 70 would confirm overbought conditions, but given the recent momentum, the RSI may remain elevated for a few more sessions. Divergences between the RSI and price action (e.g., lower highs in RSI despite higher price highs) would strengthen the bearish case.

Fibonacci Retracement

Key Fibonacci levels from the major swing low ($807.00 on April 23) to the swing high ($1051.00 on July 24) are relevant. The 50% retracement level at $929.00 is currently acting as a dynamic support/resistance zone. The price’s recent test of this level and subsequent rebound suggests buyers are active around $920–$930. A breakdown below the 61.8% level ($884.00) would target the 78.6% level ($845.00), but this remains speculative at present.

Backtest Hypothesis

A hypothetical backtest strategy could integrate the above indicators by entering long positions when the 50-day moving average crosses above the 200-day line (Golden Cross) and the MACD histogram turns positive, while avoiding entries if the RSI exceeds 70. Historical data from 2024–2025 show that such a strategy would have captured the July–August rally but faced challenges during the April–June volatility. For example, a Golden Cross in mid-July aligned with a MACD crossover and RSI below 50, yielding a 12% return in the following month. However, overbought RSI levels in late August may have prompted early exits, limiting gains. This suggests the strategy’s efficacy depends on combining moving averages with momentum filters to avoid whipsaws in high-volatility environments.