Tencent Music Slides 2.75% Over Two Sessions As Technicals Signal Near-Term Caution

Tencent Music (TME) fell 1.05% in the most recent session to close at $19.79, marking two consecutive days of decline totaling a 2.75% loss. This price action occurred against a backdrop of decreasing volume compared to the preceding week, suggesting reduced conviction in the current downtrend.
Candlestick Theory
Recent daily candles show rejection of the $20.50-$20.62 resistance zone, evidenced by the July 9th shooting star (high: $20.62, close: $20.35) that preceded the current pullback. Key support resides at $19.57 (July 11th low), closely aligning with the psychologically significant $19.50 level. A breach below $19.50 could signal further downside toward the June 26th swing low of $18.61. Resistance remains firm at $20.11-$20.20, reinforced by multiple unsuccessful breakout attempts in early July.
Moving Average Theory
The 50-day MA ($18.52) maintains its position above the 100-day ($16.98) and 200-day MA ($14.10), confirming the primary uptrend. However, recent bearish momentum is reflected in the price crossing below the 20-day MA ($19.98) on July 10th. The current price ($19.79) hovering near the 20-day MA suggests near-term indecision. Sustained trading below this level may trigger a test of the 50-day support. Golden crosses remain intact across all three major averages, underpinning the longer-term bullish structure.
MACD & KDJ Indicators
The MACD histogram shows weakening bullish momentum, with the July 10th signal line crossover turning negative as the MACD line (0.78) declined below its signal line (0.82). Meanwhile, the daily KDJ exhibits bearish alignment: The %K line (38) crossed below %D (45) on July 10th, and both trend downward toward oversold territory. While not yet at extreme levels, this convergence of negative momentum signals suggests potential near-term downside continuation unless reversed.
Bollinger Bands
Price rejection occurred at the upper Bollinger Band ($20.52) on July 9th, triggering the current retracement toward the middle band (20-day SMA at $19.98). Band width contracted notably during June’s consolidation but expanded during the July rally attempt, reflecting renewed volatility. Current price proximity to the middle band implies neutral intra-trend positioning. A decisive break below $19.80 could target the lower band ($19.45), with heightened volatility risk if this support fails.
Volume-Price Relationship
The July 8th rally to $20.29 occurred on elevated volume (9.19M shares), validating bullish conviction. Conversely, the subsequent declines (July 10-11) saw diminishing volume (5.02M and 4.76M shares), suggesting limited bearish follow-through. This divergence potentially indicates accumulation near $19.50-$20.00. Nevertheless, the absence of capitulation-level volume during the pullback warrants caution, as it may signal insufficient selling pressure to sustain a deeper correction.
Relative Strength Index (RSI)
The 14-day RSI (58) retreated from near-overbought territory (69 on July 9th) but remains above the neutral 50 level. While not oversold, the downward trajectory suggests weakening momentum. Historical reactions at RSI 55 (May-June support) warrant monitoring; failure to hold this level may trigger a test of the 40-45 support zone where multiple trend reversals originated. The RSI’s position above 50 still favors bullish momentum structurally despite recent weakness.
Fibonacci Retracement
Applying Fibonacci to the swing low ($18.61 on June 26) and recent high ($20.62 on July 9) reveals critical confluences: The 38.2% retracement ($19.89) aligns with July 11th’s close ($19.79), while the 50% level ($19.61) converges with the July 11th low ($19.57). This zone represents a critical defense area for bulls. A breakdown below $19.57 targets the 61.8% retracement ($19.32) and potentially the full June consolidation range ($18.60-$18.90). Long-term Fibonacci (swing low $9.41 on Sep 18, 2024) shows major support at the 23.6% level ($17.97), reinforcing the significance of the $18.00 psychological zone.
Confluence and Divergence
Notable confluence exists at $19.50-$19.60, where Bollinger lower band, 50% Fibonacci retracement, and horizontal price support converge. Bearish divergences emerged in late June: the KDJ oscillator peaked at 80 on June 18th while price formed a higher high on July 9th, warning of fading upside momentum. Conversely, MACD’s bearish crossover lacks volume confirmation, creating tension between momentum and participation signals. The absence of oversold RSI readings amidst a pullback suggests either consolidation strength or incomplete downside.
Probabilistic Outlook
Tencent Music’s technical posture indicates a healthy correction within an ongoing uptrend. The $19.50-$19.60 support cluster appears pivotal; holding this zone may catalyze a rebound toward $20.20 resistance. Conversely, breakdown confirmation below $19.50 opens targets near $18.60-$18.90 with a moderate probability (40%) of occurring given volume patterns. The MACD-KDJ bearish alignment and RSI cooling favor near-term consolidation, but golden crosses in moving averages and the absence of panic selling sustain a 60-70% probability of renewed upside upon stabilization.