Stellantis Gains 3.38% as Three-Day Rally Drives 5.11% Cumulative Surge

Stellantis (STLA) has experienced a 3.38% increase in the most recent session, extending its three-day upward trend with a cumulative gain of 5.11%. This recent price action, coupled with historical volatility and key support/resistance levels, warrants a comprehensive technical analysis to assess short- and long-term implications. Below is a structured evaluation using multiple frameworks.

Candlestick Theory

The recent three-day rally suggests a potential bullish continuation pattern, with the closing price near the upper shadow of a hammer-like formation on October 28. Key support levels are evident at 10.76 (October 23 low) and 9.91 (October 14 low), while resistance is marked by the October 28 high of 11.31. A breakdown below 10.76 may trigger a retest of the 9.91 level, while a sustained close above 11.31 could validate a bullish breakout. Divergences between candlestick wicks and body size suggest caution, as elongated upper shadows in recent sessions may hint at short-term overextension.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (approximately 10.45) crossing above the 100-day (10.35) and 200-day (10.15) averages, indicating a bullish trend. The 200-day MA, a critical long-term reference point, has been a dynamic support since early October. However, the 50-day MA’s proximity to the 11.31 price suggests potential congestion, with a pullback to the 50-day MA (~10.50) likely before a sustainable breakout. The 200-day MA remains a critical threshold—any sustained close below 10.15 may invalidate the bullish bias.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence in recent sessions, with the MACD line (12-period EMA minus 26-period EMA) above the signal line, reinforcing bullish momentum. The KDJ indicator, however, indicates overbought conditions, with the K line (3.38%) and D line (2.85%) both above 70. This confluence suggests a high probability of a short-term pullback, though the RSI’s elevated reading (68) tempers the urgency of a reversal. A bearish crossover in the KDJ indicator would likely precede a retest of the 10.76 support.

Bollinger Bands

Volatility has expanded recently, with the bands widening to 1.60 points (October 28), reflecting heightened uncertainty. The price is currently near the upper band, a classic overbought condition that historically precedes corrections. The middle band (10.85) serves as a dynamic pivot—if the price retracts to the lower band (~10.40), it may signal a continuation of the bullish trend. Conversely, a sustained close above the upper band would confirm a breakout, but this requires robust volume confirmation.

Volume-Price Relationship

Trading volume has surged in recent sessions, with the October 28 close accompanied by a volume of 25.3 million shares—a 20% increase from the prior day. This validates the bullish price action, as rising volume typically supports trend sustainability. However, divergences between volume and price may emerge if the price continues higher without proportional volume spikes. A volume contraction during an upward move could signal waning momentum.

Relative Strength Index (RSI)

The 14-period RSI has reached 68, approaching overbought territory but not yet breaching 70. This suggests that while the short-term rally is strong, it is not yet at a critical inflection point. A close below 50 would indicate weakening momentum, while a move above 70 would heighten the risk of a correction. The RSI’s recent divergence with price action (higher highs in price but lower highs in RSI) warrants caution, as it may foreshadow a trend reversal.

Fibonacci Retracement

Applying Fibonacci levels to the year-to-date range (9.12 low to 14.28 high) reveals key levels: 61.8% at ~11.65 and 78.6% at ~12.45. The current price (11.31) is near the 50% retracement level, suggesting a potential consolidation phase. A breakout above 11.65 would target the 12.45 level, while a breakdown below 10.76 may retest the 9.91 Fibonacci level (38.2% retracement).

Backtest Hypothesis

A backtest strategy involving the Triple Bottom pattern—buying after three consecutive troughs at the same price level and exiting at the next support break—could be applied to Stellantis’s historical data. For instance, the September 14–16 troughs around 9.63 form a potential Triple Bottom. A buy signal would trigger on a breakout above the neckline (~9.75), with a target at the next support level (~10.20). While the strategy theoretically aligns with Stellantis’s recent volatility, the lack of comprehensive historical data for this specific pattern limits robust backtesting. However, in high-volatility sectors like automotive, such patterns may yield a 60% win rate, though false signals (30–40%) necessitate strict risk management.