Shopify Drops 3.88% As Bearish Signals Converge Below Key $150 Resistance

Shopify (SHOP) declined 3.88% during the most recent session, closing at $144.27 after trading between $142.93 and $148.50. This movement occurred alongside a trading volume of 9.49 million shares, positioning the stock below recent resistance levels.
Candlestick Theory
Recent candlestick patterns show Shopify formed a bullish marubozu on August 6th (+21.97%), signaling strong conviction. However, subsequent sessions developed bearish engulfing patterns near $154.90, confirming resistance at this psychological level. The August 14th close near the session low ($144.27) reinforces immediate support at $142.93 – a breach below this level could accelerate selling toward $137. Key resistance remains firmly established at $150-$151.65, a zone tested unsuccessfully three times in the past week.
Moving Average Theory
The 50-day moving average ($122) crossed above the 100-day MA ($110) in late July, confirming a bullish intermediate trend. Despite the recent pullback, price action holds comfortably above both averages. However, the 200-day MA ($98) lies considerably lower, revealing divergence: short-term momentum is weakening while the long-term trend remains structurally intact. A breakdown below the 50-day MA would signal deterioration in intermediate bullish sentiment.
MACD & KDJ Indicators
MACD histogram turned negative after August 11th, with the signal line crossing below the MACD line – a bearish crossover suggesting fading upward momentum. Simultaneously, the KDJ oscillator shows the %K line (currently 35) crossed below %D (42) from overbought territory (>80 on August 6th). This convergence indicates weakening momentum, though the absence of extreme oversold readings implies further downside potential before a reversal signal materializes.
Bollinger Bands
Bollinger Bands expanded dramatically after the August 6th breakout, reflecting surging volatility. Price has since retreated from the upper band ($156) to test the middle band (20-day SMA near $142). The bands are now contracting, suggesting decreasing volatility and a potential coiling period. Failure to hold the midline support could trigger a test of the lower band near $128, aligning with the 38.2% Fibonacci level.
Volume-Price Relationship
The August 6th surge occurred on exceptional volume (38.5M shares – 3x average), validating bullish conviction. However, the subsequent 3.88% drop on August 14th transpired alongside above-average volume (9.49M shares vs. 30-day avg ~8.5M), confirming distribution. This divergence between high-volume declines and lower-volume rebounds signals persistent selling pressure.
Relative Strength Index (RSI)
The 14-day RSI retreated sharply from overbought conditions (85 on August 6th) to a neutral 48 currently. While not yet oversold, the speed of this descent suggests weakening momentum. Historically, RSI rebounds have occurred near 40 during this uptrend (last seen July 16th), making that level a key watch zone. However, RSI’s failure to reach oversold territory during pullbacks cautions against premature reversal assumptions.
Fibonacci Retracement
Using the swing low of $76.89 (April 4th) and high of $154.90 (August 6th):
- 23.6% retracement: $137.71
- 38.2% retracement: $126.99
Recent price action tests the 23.6% level, aligning with the August 14th low of $142.93. This zone now serves as critical short-term support. A decisive break could trigger momentum toward the 38.2% level ($127), which converges with the 100-day MA and the July consolidation range.
Confluence & Divergence Observations
Bearish confluence emerges between MACD/KDJ crossovers, volume-supported declines, and RSI momentum decay. Notably, the Fibonacci 23.6% level ($137.71) converges with Bollinger mid-band support and the August 14th low ($142.93), creating a high-probability bounce zone if tested. However, divergence persists between short-term indicators (warning of pullback) and long-term moving averages (confirming primary uptrend).
Probabilistic Outlook
Shopify faces near-term headwinds below $150 resistance, with momentum indicators supporting additional consolidation. The $142-$137 zone presents a critical bullish defense – holding here could enable base formation. However, high-volume breakdown below $137 would likely target the $127 support cluster (38.2% Fib + 100-day MA). Bullish resumption requires a volume-backed close above $151.65 to negate the current distribution pattern.