UMC Surges 9.98% in Latest Session, Extending Two-Day Rally to 14.93% on Technical Bullish Signals

UMC (United Microelectronics Corporation) has surged 9.98% in the latest session, extending its two-day rally to 14.93%. This sharp rebound follows a period of consolidation and prior bearish momentum, suggesting potential short-term bullish momentum. Below is a technical analysis of the stock’s recent performance across multiple frameworks.

Candlestick Theory

The recent price action reveals a strong bullish bias, with a two-day rally forming a takuri (dragon tail) candlestick pattern, characterized by a long upper shadow and a small body. This pattern often signals a rejection of lower prices, aligning with the stock’s break above a prior resistance level at ¥8.15 (previously a peak on 2026-01-06). Key support levels now include ¥7.84 (a prior trough on 2026-01-02) and ¥7.53 (a 2025-12-01 low). Resistance is likely to test ¥9.11 (a 2026-01-07 high) before encountering stronger barriers near ¥9.30. The confluence of these levels with moving averages (see below) could validate continuation or trigger a reversal if rejected.

Moving Average Theory

Short-term momentum is confirmed by the 50-day MA (currently around ¥7.90–¥8.00) crossing above the 100-day MA (¥7.75–¥7.80), forming a golden cross. The 200-day MA (¥7.50–¥7.60) remains below both, suggesting an intermediate uptrend. A break above ¥9.11 would likely pull the 200-day MA upward, reinforcing bullish bias. Conversely, a retest of ¥7.84–¥7.78 (a prior consolidation range) could see the 50-day MA flattening, signaling weakening momentum.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, indicating accelerating bullish momentum. However, the KDJ (Stochastic) oscillator shows overbought conditions (%K at ~85, %D at ~78), suggesting a potential near-term pullback. A bearish divergence is observed between the KDJ and price action if %K fails to make a new high despite rising prices, which may indicate a loss of upward momentum.

Bollinger Bands

Volatility has expanded sharply, with the price surging near the upper band at ¥9.11. This suggests aggressive buying pressure but also overbought conditions. A retest of the lower band (¥7.84–¥7.78) could trigger a rebound if volatility normalizes. Band contraction is absent, implying no imminent breakout or breakdown signal.

Volume-Price Relationship

Trading volume has surged on the recent rally, with the most recent session’s volume (21.0 million shares) being the highest in the dataset. This validates the strength of the price action. However, a decline in volume during follow-through rallies could signal weakening conviction, particularly if the price fails to sustain above ¥8.93 (current close).

Relative Strength Index (RSI)

The 14-day RSI is near 70, indicating overbought conditions. While this does not guarantee a reversal, it highlights a potential correction. A drop below 60 would suggest a return to equilibrium, while a failure to hold above 50 could trigger a bearish shift.

Fibonacci Retracement

Applying Fibonacci levels to the recent ¥7.78–¥8.93 move, key retracement levels include 23.6% at ¥8.56, 38.2% at ¥8.32, and 50% at ¥8.36. A pullback to the 38.2% level could attract buyers, while a breakdown below 61.8% (¥7.95) may trigger deeper selling.

The analysis reveals a high-probability scenario of continued bullish momentum in the short term, supported by confluence between candlestick patterns, moving averages, and volume. However, overbought conditions in RSI and KDJ, coupled with potential bearish divergences, suggest caution. Traders should monitor the ¥8.93–¥9.11 range for sustainability and watch for volume contraction as a warning sign. Long-term trend integrity depends on maintaining above ¥7.84, with a breakdown risking a return to prior consolidation zones.