Teck Resources Surges 6.47% as Bullish Candle and Moving Averages Signal Uptrend

Candlestick Theory

The recent 6.47% surge in Teck Resources (TECK) forms a strong bullish candle, indicating aggressive buying pressure. Over the past month, the price has exhibited higher highs and higher lows, suggesting a sustained uptrend. Key support levels are identified at $41.20 (October 10 low) and $39.56 (September 26 low), while resistance aligns with the recent high of $44.82 (October 13 high). A bullish engulfing pattern on October 13, where the candle’s body completely covers the prior bearish session, reinforces the likelihood of continued upward momentum. However, a potential bearish reversal could emerge if the price fails to hold above $41.20, triggering a test of the $39.56 support.

Moving Average Theory

TECK’s 50-day moving average is positioned above the 200-day MA, confirming a bullish medium-term trend. The current price of $44.57 sits above both the 50-day ($~43.50) and 200-day ($~41.00) averages, suggesting short-term strength. A narrowing gap between the 50-day and 100-day MAs indicates converging momentum, which may signal a potential slowdown if the 50-day MA crosses below the 100-day MA. The 200-day MA, acting as dynamic support, has historically held during pullbacks (e.g., October 10’s $41.20 low), making it a critical level to monitor for trend sustainability.

MACD & KDJ Indicators

The MACD line (12,26,9) crossed above the signal line in early October, confirming bullish momentum. The histogram’s expansion aligns with the recent 6.47% rally, suggesting strong upward inertia. Conversely, the KDJ (Stochastic) oscillator shows overbought conditions (K ~85, D ~80), raising caution about a near-term correction. However, the absence of bearish divergence (price making higher highs while K/D peaks lower) reduces the likelihood of an immediate reversal. A sell signal may emerge if the K line falls below D and closes beneath 80, but this would require a pullback to validate.

Bollinger Bands

Volatility has spiked, with the price nearing the upper Bollinger Band ($44.82). The bands have widened from a prior contraction in early October, signaling a breakout. While this typically indicates strong momentum, prolonged trading near the upper band increases the risk of a mean reversion. A close below the middle band ($43.00) would suggest weakening momentum, while a sustained position above the upper band could extend the rally.

Volume-Price Relationship

The recent 6.47% gain on October 13 was accompanied by above-average volume (4.2 million shares), validating the move. However, volume has since declined on follow-through up days, indicating waning conviction. Conversely, the sharp 4.6% drop on October 10 occurred on massive volume (8.5 million shares), suggesting bearish exhaustion. The current volume profile suggests a mixed signal: bullish on the rally but bearish on the lack of follow-through. A surge in volume during a pullback could signal a short-covering rally, while declining volume during an uptrend may hint at distribution.

Relative Strength Index (RSI)

RSI has pushed into overbought territory (~75), typically a warning of potential near-term exhaustion. However, in strong uptrends like TECK’s, RSI can remain overbought for extended periods. A bearish divergence (price making higher highs while RSI peaks lower) would heighten the risk of a correction, but this has not yet materialized. A close below 60 would confirm a pullback, while a sustained move above 70 could signal a continuation of the rally.

Fibonacci Retracement

Key Fibonacci levels from the recent high ($44.82) to the low ($39.56) include 38.2% at $43.40 and 50% at $42.19. The price has held above both levels, reinforcing the uptrend. A breakdown below $42.19 would target the 61.8% retracement at $40.67, which could trigger a deeper correction. Conversely, a break above $44.82 would aim for the 127% extension at $47.00, suggesting a potential continuation of the bullish phase.

Backtest Hypothesis

The proposed strategy—buying when RSI crosses above 70 and selling when it drops below 70—would have limited applicability for TECK based on historical data. Over the past year, RSI has remained below 70 for most of the period, with only brief excursions into overbought territory. For instance, the 6.47% rally on October 13 pushed RSI into overbought levels, but the lack of follow-through volume and subsequent pullback suggest the signal would have been short-lived. A backtest from 2022 to 2025 using annual RSI data (64.8, 68.07, 65.23, 68.85) confirms no overbought conditions, resulting in no trades. This highlights the strategy’s limitations in capturing momentum in commodities-driven stocks like TECK, which are influenced by macroeconomic factors rather than pure technical dynamics.