Sherwin-Williams (SHW) Surges 6.6% as Bullish Confluence Targets $354

Candlestick Theory
The recent price action for The Sherwin-Williams (SHW) shows a strong bullish reversal pattern, with a 6.60% two-day rally pushing the price to a recent high of $354. A key resistance level forms near $354, marked by a failed bearish candlestick on January 8 (low of $325.475) and a prior peak at $344.69 (November 28). Support is evident at $325–$330, where multiple prior bounces occurred. The recent bullish engulfing pattern and a higher high/lower low structure suggest momentum is shifting from consolidation to an uptrend.

Moving Average Theory

The 50-day moving average (estimated $338–$340) is above the 200-day (approx. $330–$335), confirming a bullish trend. The 100-day MA (around $335) acts as a dynamic support level, which the price has held above since mid-December. The current price of $353.28 sits comfortably above all three, indicating a strong short- and medium-term uptrend. Confluence between the 50-day MA and the 38.2% Fibonacci retracement level ($339.50) suggests potential for further consolidation before a breakout.

MACD & KDJ Indicators

The MACD line (12,26,9) crossed above the signal line in late December, confirming bullish momentum. The histogram has expanded since late January, aligning with the recent 6.6% surge. However, the RSI (14-period) has surged to 75–78, entering overbought territory, while the KDJ (Stochastic) shows a %K line above 80, suggesting potential exhaustion. A bearish divergence in the KDJ could signal a pullback, though the MACD’s strength suggests the trend may persist.

Bollinger Bands

Volatility has expanded sharply in early January, with the price breaking above the upper band after a period of contraction in mid-December. The current price of $353.28 is near the upper band, indicating overbought conditions. A retest of the 20-day Bollinger Band (approx. $345–$348) could trigger a correction, but the widening bands suggest continued volatility.

Volume-Price Relationship

Trading volume spiked to 2.4 million shares on January 9 (up 20% from the prior day), validating the recent rally. However, volume has declined slightly in the past two sessions, raising questions about sustainability. Historically, volume has been highest during breakouts (e.g., $344.69 on November 28) and during sharp declines in late December, suggesting institutional activity during key inflection points.

Relative Strength Index (RSI)

The 14-period RSI stands at ~78, confirming overbought conditions. While this typically suggests a short-term pullback, the RSI has not yet formed a bearish divergence with price (which would signal a stronger warning). A drop below 65 may indicate a healthy retracement to test the 50-day MA, whereas a sustained move above 80 could extend the rally.

Fibonacci Retracement

Key Fibonacci levels between the December 19 low ($319.49) and January 9 high ($354) are critical. The 38.2% retracement ($339.50) and 50% retracement ($336.70) align with the 50-day MA and a prior support zone. A break above the January 9 high would target the 61.8% level ($346.50), but a failure to hold $339.50 could trigger a retest of the 38.2% level.

Confluence and Divergences
The strongest confluence occurs at $338–$340, where the 50-day MA, Fibonacci 38.2% retracement, and prior support converge. This area offers a high-probability entry if the price corrects. Divergences are minimal currently, but the RSI’s overbought reading and narrowing MACD histogram hint at near-term profit-taking. The volume profile suggests sustainability, though caution is warranted if volume fails to expand on future breakouts.

Summary

The Sherwin-Williams is in a strong short-term uptrend, supported by bullish candlestick patterns, aligned moving averages, and expanding Bollinger Bands. While the RSI and KDJ indicate overbought conditions, the MACD and volume suggest momentum remains intact. Traders should monitor the $338–$340 confluence zone for continuation signals or a potential pullback. A breakdown below $325–$330 would invalidate the bullish case, whereas a sustained close above $354 could extend the rally to $360.