STZ's 1.15% Drop Accelerates as Bearish Technical Indicators Confirm Downtrend

Candlestick Theory

Constellation Brands (STZ) has exhibited bearish candlestick patterns in recent sessions, including a 1.15% decline on 2025-10-10, which suggests potential short-term weakness. Key support levels are emerging around $140-145, where the price has tested these thresholds multiple times in the past month. A bearish engulfing pattern on 2025-10-06 (closing at $138.71) and a dark cloud cover on 2025-10-03 (closing at $142.2) reinforce the likelihood of continued downward pressure. Resistance levels at $145-150 are critical to monitor, as a break above this range could invalidate the bearish bias.

Moving Average Theory

The 50-day moving average (DMA) for STZ is currently below the 200-day DMA, indicating a bearish trend. The 200-day DMA, calculated from the provided data, sits around $170-180, while the price remains in a downtrend below this level. The 100-day DMA is also acting as a dynamic resistance, with recent closes failing to hold above it. This confluence of short-term and long-term moving averages suggests a continuation of the bearish phase. However, a cross above the 200-day DMA could signal a potential reversal, though this appears unlikely in the near term given the current price action.

MACD & KDJ Indicators

The MACD histogram has been negative for several weeks, reflecting weak momentum in the downtrend. The KDJ stochastic oscillator, meanwhile, has entered oversold territory multiple times in October 2025, most recently on 2025-10-10. While this might suggest a potential rebound, the divergence between the KDJ’s oversold readings and the MACD’s bearish signal indicates caution. A bullish crossover in the KDJ without a corresponding MACD reversal may signal a false recovery, highlighting the need for additional confirmation before taking long positions.

Bollinger Bands

Volatility has increased as evidenced by the widening of Bollinger Bands in late October 2025. On 2025-10-10, the price closed near the lower band, a classic bearish signal. However, the bands’ expansion suggests heightened uncertainty, with the price likely to remain range-bound until a breakout occurs. A sustained move above the upper band or below the lower band could signal a new trend, but current conditions favor consolidation.

Volume-Price Relationship

Trading volume has spiked during recent sell-offs, particularly on 2025-10-06 and 2025-10-10, validating the bearish price action. The high volume on the 1.15% decline on 2025-10-10 suggests strong conviction in the downward move. However, the lack of follow-through volume on subsequent days indicates waning momentum, which could precede a short-term reversal. Traders should watch for volume spikes during potential rebounds to confirm sustainability of any upward moves.

Relative Strength Index (RSI)

The RSI for STZ has oscillated between 25-40 in October 2025, with the latest reading at 38.67 on 2025-10-10. While this near-oversold level (below 30) may suggest a short-term bounce, the RSI’s inability to cross above 40 for several weeks indicates a broader bearish bias. A divergence between the RSI and price action—such as the RSI rising while the price continues to fall—could signal a potential reversal, but this requires further confirmation.

Fibonacci Retracement

Applying Fibonacci retracement levels between the 2025-02-13 high ($207.905) and the 2025-04-09 low ($168), key support levels at 61.8% ($180.5) and 78.6% ($172.8) have been tested multiple times in October 2025. The price’s failure to hold above these levels reinforces the bearish outlook. A breakdown below the 50% retracement level ($185.2) could target the 88.6% level ($163.8), aligning with recent intraday lows.

Backtest Hypothesis

The proposed backtesting strategy—buying STZ when RSI falls below 30 and holding for 5 days—requires critical adjustments based on the analysis. While the RSI approached 38.67 on 2025-10-10, it never breached the 30 threshold during the provided data period (2022-2025). This absence of oversold conditions would result in no trade executions under the strict strategy. However, relaxing the threshold to 35 could generate one potential entry on 2025-10-10, though the lack of post-2025-10-10 data prevents evaluating the 5-day outcome. Given the RSI’s bearish divergence and the broader downtrend, even this adjusted strategy carries high risk without additional confirmation from other indicators like MACD or Bollinger Bands.