Trip.com Surges 14.92% as Technical Indicators Signal Overbought Conditions and Caution

Candlestick Theory

Trip.com’s recent price action reveals a strong bullish momentum, with the stock surging 14.92% on the most recent session and 15.56% over two days. This rapid ascent suggests potential short-term exhaustion, but the formation of a "hanging man" pattern near the 75.03 high on August 28 implies caution. Key support levels emerge around 65.29 (August 27 close) and 64.93 (August 26 close), while resistance is likely near 75.03. A break below 64.93 could trigger a retest of the 63.09–64.54 range from late July, which has historically acted as a consolidation zone.

Moving Average Theory

The 50-day moving average (calculated from the 200-day dataset) appears to be trending above the 100- and 200-day averages, confirming a bullish bias in the short to medium term. The stock closed above its 200-day MA on August 28, reinforcing the uptrend. However, the 50-day MA may now be approaching the 68.03–69.07 range (late December 2024 highs), where prior resistance could act as a filter for sustainability. A crossover of the 50-day below the 200-day MA would signal a bearish shift, though this scenario seems unlikely without a significant pullback.

MACD & KDJ Indicators

The MACD histogram has expanded positively in recent sessions, with the MACD line crossing above the signal line, suggesting continued bullish momentum. The KDJ oscillator (stochastic) shows overbought conditions, with the %K line at 80–85 and %D at 75–80, indicating potential near-term divergence. While the MACD supports continuation, the KDJ’s overbought reading raises caution about a near-term correction. A bearish crossover in the KDJ (e.g., %K dipping below %D) could precede a retracement to the 65.29–64.93 support cluster.

Bollinger Bands

Volatility has expanded sharply, with the stock closing near the upper Bollinger Band on August 28. This suggests short-term overbought conditions and a potential for mean reversion. The 20-day standard deviation (estimated from the 200-day dataset) indicates bands expanding from a prior narrow range (June–July 2025), signaling heightened uncertainty. A close below the middle band (around 69.03–70.03) could trigger a contraction phase, with the lower band acting as a dynamic support near 63.09.

Volume-Price Relationship

Trading volume surged on the August 28 rally (8.97 million shares) compared to the August 27 session (2.92 million), validating the bullish move. However, volume has not yet reached the 10.42 million level seen during the February 2025 rally, which preceded a 11.38% drop. While current volume supports the uptrend, a sharp decline in volume during subsequent sessions could indicate weakening conviction. The positive divergence between price and volume (e.g., higher highs with declining volume) would raise caution about sustainability.

Relative Strength Index (RSI)

The RSI (14-day) is currently above 70, confirming overbought conditions. Historical data shows the RSI peaked near 75–80 during the February 2025 surge before a sharp correction. While overbought readings are a warning, the RSI’s failure to form a bearish divergence (price highs above previous highs but RSI highs below) suggests the uptrend may persist. A drop below 50 would signal a potential shift in momentum, with critical support at 40–45.

Fibonacci Retracement

Applying Fibonacci levels between the 59.43 low (August 2024) and 75.03 high (August 2025) reveals key retracement levels. The 61.8% level at ~65.29 aligns with the August 27 close, acting as a probable support zone. A breakdown below this level could target the 50% retracement at ~67.23, followed by the 38.2% level at ~68.73. Conversely, a break above 75.03 would aim for the 78.6% extension at ~79.50, though this requires sustained volume and momentum.

Backtest Hypothesis

A backtesting strategy leveraging confluence between MACD bullish crossovers, RSI overbought warnings, and volume spikes could yield insights. For example, entering long on August 28 (MACD crossover, RSI above 70) with a stop-loss at 64.93 would align with the recent breakout. Historical data from February 2025 shows that overbought RSI levels often precede corrections, but the absence of bearish divergences in the MACD and KDJ suggests the trend may outperform typical patterns. This setup implies a high-risk, high-reward trade, with a 2:1 risk-reward ratio targeting 79.50.