Ubiquiti Rebounds 4.86% With Bullish Engulfing Pattern Signaling Trend Reversal

Ubiquiti (UI) gained 4.86% in the most recent session, closing at $686.85 after trading between $665.34 and $691.67. This strong rebound followed a 5.96% decline on 2025-10-10 and signals a potential reversal of the short-term corrective phase.
Candlestick Theory
The price action formed a Bullish Engulfing pattern on 2025-10-13, as the day’s green candle fully engulfed the prior session’s red body. This reversal signal is amplified by the convergence with the key support at $655.02 (2025-10-10 low). Resistance is established at $691.67 (intraday high of the latest session), with a decisive breach potentially accelerating upward momentum. Failure to hold above $665.34 (recent session’s low) could indicate weakness.
Moving Average Theory
The stock trades firmly above its long-term moving averages, confirming a sustained bullish trend. The 50-day SMA (approximately $620), 100-day SMA ($510), and 200-day SMA ($430) are aligned in ascending order. Recent price dips toward the 50-day SMA have been met with buying interest, reinforcing it as dynamic support. The separation between shorter and longer-term averages highlights robust intermediate momentum despite recent volatility.
MACD & KDJ Indicators
The MACD (12,26,9) histogram shows diminishing bearish momentum, with a potential bullish crossover forming after the rebound from oversold territory. Concurrently, KDJ (9,3,3) exited oversold conditions (%K and %D crossed above 20) following the 4.86% surge. This confluence suggests strengthening upward momentum. A confirmed MACD crossover would further validate the reversal signal.
Bollinger Bands
Volatility expanded during the correction but contracted sharply after the recovery, with the 20-day bands tightening around the $660–$690 range. The latest close near the upper band ($692) signals strength, while the midline (20-SMA ≈ $660) now acts as support. A band squeeze in this context often precedes directional continuation, favoring upside resolution given the trend structure.
Volume-Price Relationship
The 4.86% advance occurred on elevated volume (241,880 shares vs. 200,972 shares on the prior down day), confirming bullish conviction. This follows a volume-supported breakout on 2025-08-22 (30.64% gain on 701,942 shares), which established the trend’s core foundation. Sustained volume above the 50-day average would reinforce the recovery’s credibility.
Relative Strength Index (RSI)
The 14-day RSI rebounded sharply from near-oversold territory (35) to neutral (52) after the 4.86% rally. This shift aligns with the bullish reversal signals but remains below the overbought threshold (70), allowing room for further upside. Divergence was observed earlier during the correction (price made lower lows while RSI held above its prior low), foreshadowing the rebound.
Fibonacci Retracement
Using the major swing low of $390.57 (2025-08-21) and the recent peak of $705.78 (2025-10-09), the corrective low of $655.02 (2025-10-10) aligns precisely with the 23.6% retracement level ($655). The rebound from this shallow retracement implies strong underlying demand. Next resistance lies at the 138.2% extension ($758), while the 38.2% retracement ($618) offers critical support if selling pressure resumes.
Confluence and Divergences
Confluence is noted near $655 (Fibonacci 23.6%, price support, and KDJ/MACD oversold reversal), where multiple indicators anchor a high-probability bounce. The volume-backed recovery and Bollinger Band alignment reinforce this. Divergences are limited currently; however, traders should monitor RSI for premature overbought signals if prices approach $700 without corresponding volume expansion. Overall, the technical structure suggests Ubiquiti is positioned to resume its primary uptrend, provided it sustains above $665.