Toronto-Dominion Bank Stock Surges 3.14% After 4.32% Drop as Technical Indicators Signal Bullish Reversal

The Toronto-Dominion Bank (TD) closed its most recent session up 3.14%, reflecting a strong reversal from the prior day’s 4.32% decline. This sharp rebound suggests short-term volatility and potential exhaustion of bearish momentum, warranting a closer look at technical indicators to assess sustainability and future direction.

Candlestick Theory

Recent price action reveals a bullish engulfing pattern on 2025-08-29, where the candle’s body completely covers the preceding bearish candle. This suggests a shift in sentiment from bearish to bullish. Key support levels are evident at $72.78 (2025-08-29 low) and $72.85 (2025-08-28 close), while resistance clusters form at $75.14 (recent close) and $75.12 (2025-08-15 high). A break above $75.14 could target $76.50 (2025-08-27 high), but failure to hold $72.78 may retest $71.80 (2025-06-24 low).

Moving Average Theory

The 50-day MA (calculated as ~$73.40) currently sits below the 200-day MA (~$69.00), indicating a long-term bullish trend. However, the 100-day MA (~$73.60) aligns closely with the 50-day, suggesting consolidation. Price action remains above all three averages, reinforcing an uptrend. A crossover of the 50-day MA above the 200-day MA (a “golden cross”) would strengthen bullish bias, though the recent 4.32% drop highlights vulnerability to short-term corrections.

MACD & KDJ Indicators

The MACD line (12-day EMA minus 26-day EMA) has crossed above the signal line, signaling growing momentum. However, the KDJ oscillator shows a bearish divergence: while prices rose on 2025-08-29, the %K line failed to surpass its prior high, hinting at potential overbought conditions. RSI (discussed below) corroborates this, with a reading near 70. A pullback to the 20-day MA (~$73.50) could trigger a KDJ bullish crossover, aligning with the MACD’s positive signal.

Bollinger Bands

Volatility has expanded recently, with the 20-day band width at ~$2.40. Price action on 2025-08-29 closed near the upper band ($75.14), suggesting overbought conditions. A reversion to the mid-band (~$73.90) is probable, but the narrowing bands in early August (e.g., 2025-08-13) indicate a potential breakout. A sustained close above $75.14 would validate bullish momentum.

Volume-Price Relationship

Trading volume spiked to 2.9 million shares on 2025-08-29, the highest in a month, validating the 3.14% rally. However, volume declined on the subsequent down session (2025-08-28), signaling weak follow-through. This “volume divergence” suggests caution: while the rally was robust, sustaining it may require higher volume on future updays.

Relative Strength Index (RSI)

RSI stands at ~69.5, nearing overbought territory. This aligns with the recent bullish engulfing pattern but contradicts the KDJ divergence. A close below 60 would signal a bearish correction, though a sustained move above 70 could confirm a new uptrend. Historically, TD’s RSI rarely stays above 70 for extended periods, suggesting a probable pullback.

Fibonacci Retracement

Key retracement levels from the 2025-08-28 low ($72.78) to the 2025-08-29 high ($75.14) include 61.8% at $73.40 and 50% at $73.96. Price action has tested the 50% level multiple times (e.g., 2025-08-07, 2025-07-16), indicating strong support. A break below $73.40 (61.8%) would target $72.78, while a breakout above $75.14 could extend to $76.50 (2025-08-27 high).

Backtest Hypothesis

A potential backtest strategy could leverage the confluence of MACD crossovers and Fibonacci support. For instance, entering long on a bullish MACD crossover (e.g., 2025-08-29) with a stop-loss below the 61.8% retracement level ($73.40) and a target at $75.14. Historical data shows TD’s price often respects Fibonacci levels, with 50%-61.8% retracements acting as reliable support/resistance. Integrating volume validation (e.g., confirming higher volume on rallies) could improve the strategy’s robustness.