SoFi Surges 3.63% as Bullish Candlesticks and MA Crossovers Signal Uptrend Amid Overbought RSI Caution

Candlestick Theory

SoFi Technologies (SOFI) recently closed at $27.14, up 3.63%, forming a bullish candlestick pattern. Key support levels are identified at $25.31 (October 6 low) and $26.13 (October 10 low), while resistance appears at $28.63 (September 29 high). A hammer pattern on October 9 ($27.75–$28.45) suggests short-term buying pressure, but a bearish engulfing pattern on October 10 ($26.13–$29.80) indicates potential exhaustion. The price action suggests a possible consolidation phase, with critical psychological levels near $28.00 and $27.50 acting as near-term pivots.

Moving Average Theory

Short-term bullish momentum is reinforced by the 50-day moving average (approximately $26.50) crossing above the 100-day MA ($25.80) and 200-day MA ($16.30). The current price of $27.14 sits well above all three, signaling a strong uptrend. However, the 200-day MA’s historical lag (e.g., $13.00 in early 2024) highlights the stock’s volatility and potential for a sharp correction if volume wanes. The 50-day MA may act as a dynamic support zone, but a break below $25.00 could trigger a retest of the 200-day MA.

MACD & KDJ Indicators

The MACD histogram shows a narrowing bearish divergence (negative histogram values declining from -1.5 to -0.3) since mid-October, suggesting weakening downward momentum. The KDJ oscillator, with %K at 75 and %D at 68, indicates overbought conditions, though the stock remains in a bullish trend. A crossover of %K below %D would signal a short-term pullback. The MACD line crossing above the signal line on October 13 (Golden Cross) aligns with the 3.63% rally, but the RSI’s recent 72 reading (overbought) warns of potential short-term profit-taking.

Bollinger Bands

Volatility has expanded, with the upper band at $28.50 and the lower band at $25.00. The current price ($27.14) is near the upper band, indicating overbought conditions. A break above $28.50 could trigger further gains, but a reversion to the 20-day SMA ($26.80) is probable. The narrowing bands observed in early October suggest a potential breakout, but the recent expansion implies caution for traders expecting a continuation.

Volume-Price Relationship

Volume surged on the October 13 rally (169.8 million dollars) but remains below the 10-day average ($220 million). The October 10 selloff ($295 million) saw massive volume, validating the bearish move. Divergence between price and volume (e.g., lower volume on recent rallies) raises concerns about sustainability. A sustained increase in volume above $250 million would strengthen bullish signals, while declining volume below $150 million could indicate waning conviction.

Relative Strength Index (RSI)

The 14-day RSI stands at 72, entering overbought territory. While this often precedes a pullback, SOFI’s recent pattern of RSI remaining above 60 for weeks (e.g., mid-October) suggests a strong uptrend. A drop below 60 would confirm a bearish reversal, but a retest of 80 is likely before a meaningful correction. The RSI’s alignment with MACD and KDJ provides confluence for a short-term top.

Fibonacci Retracement

Key Fibonacci levels from the October 6 low ($25.31) to the October 23 high ($30.14) include 38.2% at $28.00 and 50% at $27.70. The current price ($27.14) is near the 50% retracement level, which may act as a critical support/resistance zone. A break above $28.00 could target the 61.8% level ($26.50), while a drop below $27.14 would test the 38.2% level.

Backtest Hypothesis

The proposed backtest strategy—buying SOFI on MACD Golden Cross and exiting on Death Cross from 2022 to 2025—reveals a disastrous -54.65% return, underperforming the benchmark by 97.94%. This aligns with SOFI’s fundamentals: persistent losses (e.g., $74.2M net loss in Q3 2022), regulatory risks, and a P/S ratio of 3.33x despite no profit visibility. The recent MACD Golden Cross on October 13 has yet to trigger a Death Cross, leaving the strategy open-ended. High volatility (52.78% annualized) and negative Sharpe ratio (-0.36) underscore the strategy’s unsuitability for risk-averse investors.